Property prices in India rise by 17% in last one year:Makaan.com Property Index

Property investors and real estate industry players can take a sigh of relief; property prices in India have shown a reasonable uptrend in the last 12 months. As per the March 2010 release of Makaan.com Property Index (MPI), the national index stood at 1117 compared with 954 in the corresponding month last year, an increase of over 17%. The rise in national index is attributed to the hardening of property prices in the western markets of Mumbai and Pune, which rose by 29.4% and 28.1% respectively.
Delhi rose by 6.8% in the same period. Putting pressure on the index were the property price movements in southern cities of Hyderabad, Bangalore and Chennai that corrected by 3.2%, 2.5% and 1.4% respectively over the last one year.
It is interesting to analyze the trends in property price movements. Prices fell in the first half (Jan-June period) of 2009 when the index dropped from 1000 to 946. This period was marked by complete lack of interest among investors & home buyers in making long term high value purchase decisions. With the Indian economy showing sign of revival and consumers becoming more confident about their future earnings, the property prices started rising in the second half (July-Dec period); with the index reaching 1128 in December 2009.
The month of November and December saw two interesting trends. Firstly, developers in Mumbai, Delhi & Bangalore increased the prices of their existing projects. Secondly, new launches happened at prices significantly higher than the prevalent rates. This rise was too fast and too high and led to crowding out of home buyer as they caught off guard with this unexpected jump in rates. This led
to lower transaction during the January to March 2010 period. The national price index moved in a narrow range from 1080 to 1117 during this period; beautifully capturing the mood of the market.
Commenting on the findings Aditya Verma – VP & Business Head Makaan.com says, “Going forward, the signals from the economy are quite positive - the Budget for FY11 has been received positively, there is overall optimism in all sectors, job visibility is better among the salaried class. Realty sector is seeing the effects of this in the form of new launches across cities. For sustained development, it is critical to maintain property price