Mixed Trend in Residential Property prices

Bangalore:  Indian economy is going through a volatile phase and so is the real estate industry. Though there is deceleration in the real estate development, but residential property prices in India are showing up mixed trends in some cities the residential prices have increased and decreased in some other cities despite the current decelerating market scenario, reports Sagar Sen of Financial Chronicle.

 According to National Housing Bank report, residential property prices shot up more than double in past four years in three cities Faridabad, Bhopal and Chennai and in other three cities like Jaipur, Hyderabad and Bengaluru the prices have dropped down as recorded.

As per the Citywise housing price index, NHB Residex, included in 2007 with a base of 100 shows that Chennai city has observed the growth in residential property prices by 248 percent from the base 100 in 2007, Bhopal by 124 percent and Faridabad by 120 percent. However in Jaipur downfall in residential property prices have been recorded by 36 percent, Hyderabad by 9 percent and Bengaluru by 8 percent.

HDFC chairman Deepak Parekh stated that, the land policies in India have certain flaws that have led to unreasonable high prices in many metros. For instance in Mumbai, Delhi and some other metros, 90 percent of the total cost of the house goes only in land which justifies the fault in land policies and because of which there is no such solution for affordable housing.

According to the report, housing loan section is growing at a steady rate. In fiscal year 2011, the growth rate of housing loan was 21.71 percent which was 20.79 percent in fiscal year 2010. Also, housing finance companies have observed a steady growth of 16.12 percent in fiscal year 2009.

Meanwhile, Reserve Bank of India (RBI) is considering inclusion of low-cost housing loans under the priority sector-lending category.  On this note HR Khan, RBI deputy governor further explained that RBI is planning to put housing finance for weaker section as part of priority sector. He also mentioned that a committee is setup for this and probably by the first week of February the report is expected to be ready.