The latest MPI report for the third quarter of 2014, indicates softening in property rates in major cities in India. Home buyers had adopted a wait and watch approach for a longer duration owing to high property rates & an even higher home loan interest rates.
Indian property market is always considered as a strong seller’s market but the latest Makaan.com Property Index (MPI) indicates that the property market has now started showing signs of turning in favour of buyers. The latest MPI report for the third quarter of 2014, indicates softening in property rates in major cities in India. Home buyers had adopted a wait and watch approach for a longer duration owing to high property rates & an even higher home loan interest rates. This reduced the volume of property transactions considerably leading to an increase in unsold inventory in most Indian real estate markets. In the quarter July 2014 to September 2014, there are steep downward swings in property prices across all the major cities and sub-cities. Mumbai, Delhi, Kolkata, Ahmedabad, Bangalore,Hyderabad , Pune, Gurgaon and Faridabad registered a drop. Property prices remained stable in Chennai, Navi Mumbai and Ghaziabad and prices at Chandigarh, Mumbai Thane and Noida witnessed an increase
Let’s take an insight into the MPI for July - September 2014 at national, city and Sub-cities level
On the National level the Prices for properties shows a negative trend. The latest figures for Jul- Sept 2014 from the real estate market research and analysis point to a nation-wide decrease of 8.1%. This means, the property prices for the quarter have down by 8.1%, this makes the property market extremely lucrative for the buyers.
Negative price trend in Mumbai, Delhi, Kolkata, Ahmedabad, Bangalore, Hyderabad, Pune, Gurgaon and Faridabad
The Mumbai MPI has shown the maximum drop. A huge drop of 12.9% has been witnessed over the quarter. Interestingly the city in the previous quarter had shown a decent appreciation in property prices with an increase of 2.5%. But, the quarter was marked by complete lack of interest among investors & home buyers in making long term high value purchase decisions. On an annual basis too the city prices have reduced by 11.5%
The Delhi MPI has shown a dip of 4.1% over the quarter. This could be because of lack of interest of buyers after the hike in circle rates of Delhi, which made the property prices of the city skyrocket. This only means that the coming months might experience a further reduction The index for Delhi NCR has been trending downwards and on an annualized basis the prices in the city have dropped by 16.3%.
For Jul-Sept 2014, the Kolkata MPI has has confirmed a decrease 6.1%. All the three months have shown a buyer attracting trend. Almost all the major cities are putting pressure on the index. On an annual basis there has been a whopping drop of 14%.
The Hyderabad has shown a dip of 5.6% over the quarter. This means that this might be the best time for investing in the market. The third quarter of the year has brought good news for the home buyers of the joint capital this only means that the coming months might experience a further reduction or stabilization of prices.
Bangalore MPI also shows a negative trend, the index showcases a decline of 7.6%. The city 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.
Ahmedabad city like most other Indian cities experienced a sudden decrease in property prices during the Jul–Sept period. In the last quarter, Ahmedabad Index has moved down, registering a 3.9% drop.
The city of Pune is also witnessing price correction as the MPI shows a whopping drop of 7.3%. The reason for this drop can be attributed to availability of new inventory on the outskirts of the city at significantly lower value. The new launches in main city are also happening at prevailing prices. This trend is likely to continue in the recent past unless we see a increase in transactions.
Faridabad saw a whopping depreciation in property prices. The sub-city has shown a maximum negative growth of 16%. Rise in loan rate and lack of proper infrastructure might have attributed to this trend. Also, not many new properties have been launched recently. But, on an annual basis the city has seen an appreciation of 17%.
Gurgaon MPI witnessed a drop of 11%. Softening of price may be because availability of new inventory in other NCR area at significantly lower value. The new launches in Gurgaon area are also happening at prevailing prices. This trend is likely to continue unless we see a increase in transactions.
Stability in Chennai, Navi Mumbai and Ghaziabad
The city of Chennai, has reported a flat index with prices down up at a negligible 0.1%. It will be interesting to see in which direction the city will move in the coming months. On an annualized basis Chennai reported a -5.0% fall in prices. The short term trend for the city is encouraging.
For Jul – Sept 2014 period, Navi Mumbai MPI shows a decrease of 1%. The sub-city of Mumbai has been moving sideways for over a year now. It will be interesting to see in which direction the sub-city moves in the coming months.On an annualized basis Navi Mumbai reported an increase of 4%.
Ghaziabad index shows a small increase of 1% in property prices. The increase is not much as a shift under 2% is generally seen as stabilized. The property prices for the sub-city have been stabilized for quiet some and home buyers in the region can look to invest in Ghaziabad properties.
Upward trend in Chandigarh, Mumbai Thane and Noida
Chandigarh is the only city in the index which shows a positive MPI of 2.1%. This trend could be attributed to affordable housing options available in the city. Annually also the city showed an increase of 3.9%.
Mumbai Thane prices have appreciated by 4%. Mumbai Thane continues to attract talent from across the country and companies are setting up offices here to take advantage of the cost arbitrage over Mumbai. MPI data indicates that the property prices in Mumbai Thane have remained stable on the monthly and annual basis.
Noida is the only sub-city in the NCR which has shown an upward trend. The sub-city started to show an increase of 4% in this quarter. It needs to be seen if this trend is carried forward. Availability of unsold inventory has put a lid on the property prices and a sustainable increase is possible only if there is good absorption level in the coming months.