New home sales dip 10% in April-June

Sales of new homes across India (except Noida) have fallen 10% sequentially in the quarter ending June, as per international property consultants Jones Lang LaSalle (JLL), quoted in a recent Morgan Stanley report.

The number of new units sold in the quarter across India (excluding Noida in NCR) was 27,000, down 10% from 30,000 units sold in the quarter ended March 2011, which was up 5.6% compared to 28,400 units sold in quarter ended December 2010. December quarter sales were flat compared to the quarter ended September 2010 during which 28,500 units were sold.

The absorption rate (new sales divided by total unsold inventory) across the country remained 14% in the second quarter against the 17% seen in the first quarter of the calender year (CY) 2011. It was 17% in Q4CY10, down from 20% in Q3CY10, which in turn was down from 21% in Q2CY10.

Market observers say high prices of residential properties are keeping customers away from the market. “Economic growth and pricing has a far greater impact on demand than mortgage rates since 90% is a floating rate which gets normalised over 15 years of loan tenure,” says the report. 

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Property prices in Greater Noida to increase sharply

Greater Noida Industrial Development Authority (GNIDA) on Friday said consumers will have to pay much more for properties in the region in future after the Supreme Court disallowed acquisition of 176 hectares of land from farmers.

The authority also said it will return the land to the affected farmers as per the apex court ruling and will strictly follow the new land acquisition policy of Uttar Pradesh in acquiring land for future projects.
"After this court order, we will acquire all future land (plots in greater noida) keeping in mind the market price and hence will have to pay higher land prices. Automatically, sale prices will increase and hence end consumers will be impacted severely," GNIDA Chief Executive Officer Rama Raman said.

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Kochi property prices show declining trend

Real estate rates in Kochi have seen the maximum price drop of 14.85% in the Januray-March period compared with the preceding three months among Indian metros and tier II cities, according to the National Housing Bank’s (NHB) Residex-an index of property prices.

Almost eight cities have seen slight correction in the Janurary-March period. Bangalore and Faridabad followed Kochi with a drop of 12.87% and 6.25%, respectively.

“Property prices in these cities seem to have reached a certain peak value from where they have dropped,” RV Verma, NHB chairman and managing director, said on Friday.

“Inflation and rising interest rates have led to slackening of demand for housing. This scenario is putting pressure on builders to bring down their rates to push sales and increase demand.”

The NHB Residex, which was launched in July 2007, measures property prices every quarter. The index currently captures data submitted by a variety of sources, including housing finance companies and real estate agents, for 15 cities, with plans to widen the index to 63 so-called tier I cities and state capitals in the future.

Six cities among the 15 have seen a slight upward movement in and Mumbai saw an property prices - among them, Delhi saw an increase of 2.4% increase of 1.1%.

“We will be adding five more cities in the coming months,” Verma said. “We have recently held meetings with all stakeholders over this. We will announce the names of these cities once we identify them and come out with some data on these.”

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Index shows property prices begin to dip

Aspired to buy a house but could not afford it? Finally, there is some good news for you.

The latest Residex released by the National Housing Bank on Friday shows that property prices rose only in six of the 15 cities covered by the residential properties price index -- which is a situation similar to what was seen at the height of the global financial crisis. It was only Mumbai, Delhi, Ahmedabad, Chennai, Lucknow and Pune that bucked the falling trend. The steepest increase was seen in Pune, where the index rose just 5%. In contrast, Kochi (14.85%) and Bangalore (12.87%) saw the sharpest correction between October-December 2010 and January-March 2011.

So, what caused this? As demand came back with gradual economic recovery in India, realtors (real estate agents), some of whom were facing severe debt problems, started raising prices to cash in on the opportunity. Things went to the extent of prices in certain cities moving well past the pre-crisis levels. If one were to use Residex as the gauge, then there were only four cities -- Delhi, Hyderabad, Jaipur and Kochi -- where the index was lower than July-December 2008.

While prices were becoming unaffordable in many parts of the country, the Reserve Bank of India's repeated rate hikes also made purchases more expensive.

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