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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