Property prices firm despite high interest rates: Nomura

Written by Press Trust of India | Mumbai | Updated: Nov 5 2012, 09:08am hrs
Housing prices remained firm following limited supply, despite the slowdown and high interest rates, according to a Nomura report.

House prices remained on an uptrend despite weak transaction in volumes, high interest rates and slowing economic growth, as supply has been limited with fewer projects being added, especially in key markets such as Mumbai and Delhi due to delays in the government approvals," Nomura said in a report.

According to the Reserve Bank's latest housing price index, house prices remained on an uptrend, up 24.1% in Q1, compared to an average of 20% over the last two years, it said. The markets of Delhi, Mumbai, Kolkata, and Chennai saw the sharpest price rises of 21-42%, said the report.

The steady rise in house prices is one of the many reasons why consumption has remained well supported and inflation expectations have remained elevated, despite the stress in other segments of the economy, it pointed out. The report further said steady gains in physical assets have also encouraged households to divert savings away from financial assets.