Property Prices Firm Despite High Interest Rates: Nomura

Mumbai: 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 per cent in Q1, compared to an average of 20 per cent over the last two years, it said.
The metro markets of Delhi, Mumbai, Kolkata, and Chennai saw the sharpest price increases of 21-42 per cent, said the Nomura 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.
The RBI's national house price index takes into account price situations in the nine cities--Mumbai, Delhi, Bangalore, Ahmedabad, Lucknow, Kolkata, Chennai, Jaipur and Kanpur--it said.
Housing prices in Mumbai grew at a tepid 3.1 percent in June quarter, while in Kolkata was the fastest at 28.9 percent, it said, adding Bangalore and Kanpur witnessed a fall.
Going by transaction volumes, there was a 6.4 per cent rise on a sequential basis, the quarterly index showed, while on a y-o-y basis it stood at 9.3 per cent, it said.
According to a report by property consultant Jones Lang LaSalle, seven major metros including Bangalore, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune, capital values rose marginally or remained more or less stable in September.
While capital value in Bangalore during the month ranged between 3,000-6,000 per sq ft, the rentals fluctuated between 8,000 and 15,000.
Mumbai continued to top the list in terms of capital value in the range of 4,800-32,000 per sq ft while the rentals touched 95,000 per month for a 1,000 sq ft flat.
In Chennai and Delhi the capital value too saw a marginal rise ranging from 9,000-17,000 and 3,500-16,000 per sq ft, respectively. Similarly, the rents ranged between 9,000 and 30,000 and 10,000 and 23,000 (for 1,000 sq ft area) respectively.
In Hyderabad, Kolkata and Pune, capital values remainded stable ranging from 2,000-20,000, 1,800-15,000 and 3,300-4,000 per sq ft, respectively.
Rents in these three cities ranged between 5,000 and 20,000 in Hyderabad, 5,000 and 45,000 in Kolkata and 8,000 and 12,000 in Pune.