Indian property prices rise in last quarter

Prices of property in twelve of
India’s major cities rose in the last quarter after a sticky few months.  Rising interest rates had hit demand in
the country although the latest figures show a rising trend in a dozen of the
nation’s major property centres.

Rising values of property in India

The survey by the National
Housing Bank found that house prices rose in 12 Indian cities in the second
quarter of 2011 with the highest gains to be seen in the city of Bhopal.

The Times of India reports that ‘experts say the demand for
property in major cities across the country had dipped after the Reserve Bank
of India (RBI) raised interest rates 11 times since March 2010 to tame
inflation.’  Steep increases in the
cost of borrowing had resulted in a reduced number of buyers coming to the
market with the newspaper reporting that ‘several banks have witnessed a
moderation in the demand for home loans as high interest rates hit sentiment.’

However, the National Housing
Bank Residex which tracks house prices in 15 Indian cities showed that prices
are stabilising when compared to the first quarter of 2011 despite the rising
cost of mortgage borrowing.

The survey found that the city of
Bhopal posted the highest gains with property prices rising by 34.1 per
cent.  Faridabad was in second
place with gains of 33.3 per cent, followed by Kochi (24.4 per cent), Delhi
(16.7 per cent), Surat (16.4 per cent) and Chennai (13.8 per cent).

Whilst some cities posted double
digit growth, house prices rose more slowly in other areas. Bengaluru showed
house price values rising at just 4.5 per cent while the financial capital
Mumbai has shown an increase of only 3.4 per cent.  House prices in the city of Ahmedabad rose by just 2.4 per
cent whilst values in Lucknow and Pune rose by just 1.9 per cent and 1.35 per
cent respectively.