Real estate prices stagnant since 2007, says Residex. Is it true?
The Residex of National Housing Bank, which tracks residential property prices across 26 cities, reveals that property prices have not appreciated as much over the past seven years
Of the 26 cities tracked by the National Housing Bank’s RESIDEX, an index, which tracks residential property prices, just nine cities have reported an annual price appreciation of 10% or more over the past seven years. The combined average of the 26 cities reveals that property prices appreciated by just about 8% over the past seven years. While price appreciation in certain cities may seem reasonable, in other areas, the index data seems plainly wrong.
Property prices in Chennai gained the most, appreciating by as much as 20% annually over the seven-year period. Pune and Mumbai followed with a price appreciation of about 13% each. Bhopal reported an appreciation of 12.44%, while Ahmedabad reported a gain of 11.39% during the same period. Among the other major cities, Kolkata was at number 7 with a return of 10.81% and Delhi was at number 10 with a gain of 9.27%.
At the bottom of the list were cities like Bengaluru, which reported a growth rate of just 1.21% and Hyderabad that reported a decline of 1.01%. Even over the past two years, the index has gained an average of just 4.53%. Anecdotal evidence raises doubts.
During 2008-09, the prices of flats in Kalyan (East), in the Mumbai Metropolitan Region, were around Rs1,750 per sq ft. Last year, the prices went up to Rs5,500-6,000 per sq ft and as of today are being quoted at Rs4,600-Rs5,500 per sq ft in the same area.
Similarly, at Viman Nagar area in Pune, the property (residential) rates per sq ft, were around Rs4,000 in 2008-09, which rose almost double to Rs7,500 as of June 2015.
NHB mentions that actual transactions prices are considered for the study in order to arrive at an Index. The source of the data is real estate agents or brokers by commissioning the services of private research organisations of national repute. In addition, data on housing prices is also being collected from the housing finance companies and bank, which is based on housing loans contracted by these institutions.
Liases Foras, a real estate rating and research company, maintains a Real Estate Sensitivity Index known as RESSEX. According to this index, price in Mumbai’s central suburbs has appreciated by 13.59% from November 2007 to September 2014. This is in line with NHB’s RESIDEX. Unfortunately, index data relating to other cities during the same period is not freely available.
NHB launched RESIDEX in July 2007. It has been updated up to quarter ended September 2014. The index is currently being developed only for residential housing sector.
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