While the contraction in prices was seen in the January to March 2020 quarter, on an annual basis, the House Price Index showed an increase.
Amidst the COVID-19 pandemic, the impact on the real estate prices is being closely followed by the prospective buyers. Many buyers could be contemplating in buying a cheaper home than what was available at the start of 2020. How the prices will react and will they come down is something only time will tell. Many real estate developers have already cited various reasons for the price not coming down as against the popular perception.
The Reserve Bank has recently released its quarterly house price index (HPI) for Q4 of 2019-20. The index has a base of 100 for the 2010-11 and is based on transaction-level data received from housing registration authorities in ten major cities.
The ten cities considered are Ahmedabad, Bengaluru, Chennai, Delhi, Jaipur, Kanpur, Kochi, Kolkata, Lucknow and Mumbai.
One of the primary findings of the release is that all-India HPI contracted by (-) 0.2 per cent on a sequential basis (q-o-q). This contraction was largely due to decline in the house prices in Delhi, Bengaluru, Ahmedabad and Jaipur, while Mumbai recorded the highest sequential rise.
While the contraction in prices was seen in the January to March 2020 quarter, on an annual basis, the HPI showed an increase.
On an annual basis (y-o-y), the all-India HPI increased by 3.9 per cent in Q4:2019-20 from 3.0 per cent in the previous quarter and 3.6 per cent a year ago. However, the increase was not seen in all cities across the country. It varied widely across cities and ranged from 22.6 per cent (in Jaipur) to (-)13.8 per cent (in Kochi).
The findings show that prices in Q4 were higher than last year same time but the impact of COVID-19 on the financial position of the buyers may play its role on the demand side in the coming months. According to a recent survey conducted by 99acres.com, nearly 60 per cent of the prospective buyers who were looking to buy a house before the pandemic have not dropped their plans to buy within a year. The rest 40 per cent have postponed their buying plans. Th survey found that the major contributor to delaying the purchase decision is uncertainty in the market (52 per cent), followed by financial reasons (30 per cent).
There is no such best time to buy one’s own home. If you have the funds and the house that you have zeroed-in is in your budget, better buy else take a home loan to fund your dream home.