What Demonetisation? Property Prices Have Gone Up Since

By Jay Dee Infra In Demonetization No comments

What Demonetisation? Property Prices Have Gone Up Since

Many declared that India’s real estate market, which was trying to limp its way back to recovery, has received a severe blow in the form of a note ban that was announced on November 8, 2016. Of all the things it was ruled out that there will be an upwards movement in property prices after demonetisation. However, this seems not to be the case, data released by the National Housing Board (NHB) show.  Of the 50 cities that have been included in an analysis that covers the price change between October-December (December quarter of the third quarter of the financial year 2016-17 or Q3’17) and January-March (Q4’17), more than half of the cities, 26 exactly, saw property prices rising.

“It is clear from the trend that the adverse impact of demonetisation has been overstated. A large number of cities showed growth in prices, especially smaller cities,” NHB Managing Director Sriram Kalyanaraman was quoted in a Business Standard report as saying.

Let us look at the key findings as revealed by the NHB Residex.

Where prices went up

A look at the findings of the index shows that smaller cities are witnessing a better growth in terms of prices when compared to their bigger peers. Odisha capital Bhubaneswar, for instance, registered the biggest price growth in the fourth quarter of the financial year 2016-17 when compared to the third quarter ending December.  From Rs 3,636 per square foot (sqft) during the December quarter, prices reached Rs 4,078 per sqft in the March quarter, an increase of 11 per cent.

Following close were Visakhapatnam and Raipur, where property prices increased 10 per cent during the period. In industrial city of Kanpur in Uttar Pradesh also registered a price increase of eight per cent while Punjab and Haryana capital Chandigarh witnessed a price rise of six per cent. Cities such as Jaipur, Faridabad, Nashik, Vijaywada and Vadodara, too, have seen prices going up.

However, this is not to indicate that big cities are lagging. Take for example India’s financial capital Mumbai. Property prices increased 3.6 per cent on a quarter-on-quarter basis, from Rs 20,944 per sqft to Rs 21,692 per sqft. (Lying close, Thane, too, saw prices increasing.) However, it is the performance of Gurgaon, the Millennium City, which seems most remarkable. Property prices in Gurgaon grew six per cent in the fourth quarter. Gurgaon was among the most impacted cities when a slowdown had hit the Indian real estate market in 2014.

India’s information technology capital Bengaluru also witnessed a rise in price of less than one per cent while Chennai saw prices rising 1.5 per cent during the period. From Rs 7,051 per sqft to Rs 7,113 per sqft, property prices also increased in Pune. However, prices remained stable in Ahmedabad.

Where prices went down

Not all the cities witnessed an upwards pricing movement. Property prices in national capital Delhi, for instance, declined six per cent in Q4’17 when compared to Q3’17. Interestingly, when compared to 2013 levels, property in Delhi is much cheaper now. According to the NBH Residex, property in Delhi costs an average of Rs 10,690 per sqft in June 2013. Existing rates for the same area is Rs 9,686 per sqft. Prices were the lowest during the March quarter of the financial year 2014-15, when an sqft of space cost only Rs 7,600 in Delhi.

When compared to the December quarter, property prices also saw a marginal decline in Noida, Greater Noida and Ghaziabad during the March quarter. The fall in prices was more prominent in West Bengal capital Kolkata, where rates fell seven per cent – from Rs 6,098 per sqft to Rs 5,672 per sqft – on a quarter-on-quarter basis. The City of Nizams also saw prices declining two per cent, from Rs 3,876 per sqft in the December quarter to Rs 3,772 per sqft in the March quarter. A similar trend was seen in Navi Mumbai where property prices fell to reach Rs 12,131 per sqft in March when compared to Rs 12,802 in December.

Other cities where prices saw a downturn include Uttar Pradesh capital Lucknow, Bihar capital Patna, Jharkhand capital Ranchi, Gujarat capital Gandhinagar and Kerala capital Trivandrum.

Property in in Punjab’s Ludhiana, Mumbai’s Nagpur, and Uttarakhand’s Dehra Dun also declined marginally.

Source – Housing

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