Weak sentiments owing to the slowdown in the economy seems to have finally taken a toll on the demand in the residential real estate sector as house prices for the quarter ended June 2013 softened across the country. According to the data released by National Housing Bank (NHB), 22 out of 26 cities that are covered by the NHB Residex witnessed a fall in housing prices during the quarter ended June 2013, when compared with the previous quarter.
The Residex, prepared by the NHB, tracks movement in prices of residential properties on a quarterly basis. According to the index, during the period between April and June 2013 not only the tier I cities, but also the tier II cities witnessed a fall in prices.
Ludhiana witnessed the biggest correction of 6 per cent while Indore and Vijaywada were next with prices falling by 5.6 and 5.4 per cent respectively. Prices in Delhi and Mumbai fell by 1.5 and 0.5 per cent respectively. Only four cities — Nagpur, Lucknow, Surat and Dehradun — saw a rise, with Nagpur witnessing the maximum rise of 3.1 per cent.
The uniformity in the fall in residential prices is a recent phenomenon and when seen on a year-on-year basis, prices in only 9 out of 20 cities declined, with Indore and Ludhiana witnessing the biggest fall in a year by 9.4 and 8.2 per cent respectively. While Jaipur witnessed the biggest surge over the last one year at 41 per cent, Delhi and Mumbai saw prices rise by 15.7 and 12.2 per cent respectively in June 2013 over that in June 2012.
But price fall may not be a real indicator of the ongoing slowdown say experts. “Prices are not down too much and in some cases they have not even fallen but sales are definitely going down,” said Anshuman Magazine, chairman & MD of CB Richard Ellis India.
The situation is, therefore, different for different cities. “Mumbai is in a much worse situation than Delhi and it has been witnessing a decline in transactions over the last two years,” said Gulam Zia, national director, research and advisory services, Knight Frank India. The prices in Mumbai however rose by 12.2 per cent over the last one year.
Reasons for the softening
While the commercial real estate prices started to ease over the last couple of years amidst weakening economic fundamentals, the markets saw the coming softening in residential real estate