Property Prices begin to rise in some Indian cities: Makaan.com Property Index (MPI)
Property investors and real estate industry players can take a sigh of relief as property prices has started to show a upward trend in some Indian cities. As per the latest release of Makaan.com Property Index (MPI) for April - June quarter, property prices have risen in six out of nine Indian cities. There was a stability in the national index with prices going down by a small 0.6%, however, price index for Hyderabad, Pune, Chennai and Mumbai showed a positive movement. Prices in these markets moved up in the range of 2.5% to 8.5% over the last quarter. The index for Ahmedabad and Chandigarh also moved in the positive direction, although, the rise here was significantly lower (under 2%). On the other hand, property prices in Bangalore, Delhi NCR and Kolkata continued to move down.
Let’s take an insight into the MPI for April - June 2014 at national and city level
Upward trend in Hyderabad, Pune, Chennai and Mumbai
Property prices have appreciated in Hyderabad by 8.5% which is the highest growth reported by any city in India. Prices in Hyderabad have remained subdued over the past 3-4 years on account of uncertainty over Talengana issue. Now since the issue is behind us, the city has been fast to capitalize on the lost time. The monthly, quarterly and annual trends for Hyderabad are all positive with growth of 3.4%, 8.5% and 5.7% respectively. This makes Hyderabad the best option for property investment in India.
The city of Pune has shown a property price rise of 4.6% which is second highest in the country. Pune continues to attract IT & ITES talent from across the country and companies are setting up offices here to take advantage of the cost arbitrage over Mumbai. The prices in Pune have remained stable on the monthly and annual basis.
The cities of Chennai and Mumbai have also shown a decent appreciation in property prices with an increase of 4.0% and 2.5% respectively. Both these cities started to show an upward trend from March and April month and it needs to be seen if this trend is carried forward. Availability of un-sold inventory has put a lid on the property prices and a sustainable increase is possible only if there is good absorption in the coming months.
Stability in Ahmedabad, Chandigarh & Kolkata
The cities that show stability in MPI over the quarter are Ahmedabad, Chandigarh and Kolkata. For April – June 2014 period, Ahmedabad MPI shows an increase of 1.5%. The city has been moving sideways for over a year now and it is only in the month of June that we saw a growth of 0.8%. On an annualized basis Ahmedabad reported a -3.9% fall in prices. The short term trend for the city is encouraging.
The city of Chandigarh, has reported a flat index with prices moving up at a negligible 0.1%. Kolkata index shows a small decrease of 1.1% in property prices. It will be interesting to see in which direction these cities move in the coming months. The price movement in these cities will also set the direction for the national index.
Prices continue their negative trajectory in Bangalore and Delhi NCR
Among the cities that continue to see negative movement in prices are Bangalore and Delhi NCR. These cities have shown property prices movement of -10.8% and -6.5% respectively. Bangalore has seen a rise in property prices from October 2013 to February 2014, but it was not able to sustain that positive growth. Property prices there have been correcting since March 2014.
The index for Delhi NCR has been trending downwards and on an annualized basis the prices in the city have dropped by -15.4%. The reason for this drop can be attributed to availability of new inventory in regions like Yamuna Expressway and NH 24 at significantly lower value. The new launches in main NCR area are also happening at prevailing prices. This trend is likely to continue in the recent past unless we see a increase in transactions.
