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Real estate Summary
A Summary of India’s Realty Market Data
04:50
In a recent report by NHB Residex, the Indian property prices saw a slow increase abruptly. The survey done in 15 major cities across the country by the NHB Residex showed that the house price in increased minimally in 9 cities and dropped in 6 cities all through the year to end-June of 2012. But, when the house prices were adjusted for inflation it was observed that only in 4 cities house prices increased and in 11 cities house prices dropped.
New Delhi
According to the National Housing Bank (NHB), in the year to end of second quarter in 2012, New Delhi witnessed increase in house prices by 17.01percent, which was the lowest annual price increase since the fourth quarter of 2010. However, when the house price was adjusted for inflation, the increase in house price in Delhi was only by 6.23percent.
According to the National Housing Bank (NHB), in the year to end of second quarter in 2012, New Delhi witnessed increase in house prices by 17.01percent, which was the lowest annual price increase since the fourth quarter of 2010. However, when the house price was adjusted for inflation, the increase in house price in Delhi was only by 6.23percent.
Mumbai
In Mumbai, house prices increased by 8.84percent during the year to end of second quarter of 2012, and when adjusted for inflation the house prices in Mumbai accounted to -1.18percent.
Pune
Pune recorded highest increase in annual house price by 33.33percent and by 21.06percent when adjusted for inflation y-o-y to Q2 of 2012.
Pune recorded highest increase in annual house price by 33.33percent and by 21.06percent when adjusted for inflation y-o-y to Q2 of 2012.
Jaipur
Jaipur also witnessed strong increase in house prices by 21.88percent and 10.65percent when adjusted for inflation during the year to end-June of 2012.
Jaipur also witnessed strong increase in house prices by 21.88percent and 10.65percent when adjusted for inflation during the year to end-June of 2012.
Chennai
Chennai recorded sturdy increase in house prices by 24.6percent and when adjusted for inflation, the increase in house price resulted to 13.12percent.
Chennai recorded sturdy increase in house prices by 24.6percent and when adjusted for inflation, the increase in house price resulted to 13.12percent.
Kochi
On contrary, Kochi City in Kerala saw a huge drop in annual house price that accounted to 31.78percent and when adjusted for inflation it resulted to -38.06percent.
Bhopal
Bhopal observed drop in annual house price by -7.59percent and adjusted-inflation was -16.10percent during y-o-y to Q2 of 2012.
Bhopal observed drop in annual house price by -7.59percent and adjusted-inflation was -16.10percent during y-o-y to Q2 of 2012.
Hyderabad
Hyderabad witnessed drop in annual house price by -6.59percent and adjusted inflation was by -15.19percent during the same period.
Hyderabad witnessed drop in annual house price by -6.59percent and adjusted inflation was by -15.19percent during the same period.
Patna
Patna recorded a drop in house price by -4.11percent in the year to end second quarter of 2012 and the adjusted-inflation was -12.94percent.
Surat
Surat saw a drop by -2.58percent in annual house price and the adjusted-inflation was -11.65percent in the year-on-year to second quarter of 2012.
Faridabad
Fardiabad observed fall in annual house prices by -1.36percent and the adjusted-inflation was -10.45percent in the year to end-June of 2012.
Lucknow
Lucknow City saw a rise in house price by 6.88percent in the year to end-June of 2012 but the adjusted-inflation was -2.97percent.
Lucknow City saw a rise in house price by 6.88percent in the year to end-June of 2012 but the adjusted-inflation was -2.97percent.
Kolkata
The annual house price in Kolkata increased by 1.03percent but the adjusted-inflation was -8.27percent during the same period.
Ahmedabad
The city of Ahmedabad followed Kolkata, which showed an annual increase in house price by 2.96percent and the adjusted-inflation was -6.52percent.
Bengaluru
Bengaluru recorded an annual increase of house price by 8.70percent, but when adjusted for inflation the result was -1.31percent in year to the end of second quarter 2012.
The report released by the NHB Residex as of June 2012 showed that Chennai City had the most expensing housing in India and Kochi with the low-priced.
According to a report of First post, property sales in Mumbai City have dropped by 70percent late-201l against the peak sales in 2007. The figures of unsold units in Mumbai was more than 45percent over the launched the units by late-2011. Alike, drops in demand were observed in other cities as well across the country.
Major developers in the country like DFL and Unitech have decided to cut short new projects for a while.
Boom in housing sector in Indian Realty Industry
The house prices in India saw a brisk increase from 2002 to 2007. The drive in the rapid increase of house price were the strong economic growth and urbanization and in city centers the housing slosh was stimulated by scanty infrastructure, lack of planning and outdated land use laws.
The increase in house prices was accompanied by low interest rates and home loan rates reduced to low rate to 7.5percent in initial 2004 till 2005.
After 7.6percent per annum growth from 2003 to 2004, the economy grew at 8.9percent per annum from 2005 to 2007 that made India has one of the world’s fastest growing country in realty sector.
The rapid growth in major sectors of the Indian economy during the early 1990s fetched a rapid inflow of foreign direct investment into the country. A boom in the Information and Communications Technology (ICT) and BPO industry created rapid employment growth that drive the demand for house and lead to a surge in the construction and telecommunications sectors.
Residential property became considerably less affordable from 2000 to 2006. In 2002, generally the cost of a house in Mumbai was around 85 times the average annual income, which turned out to be 100 times the average annual income by 2006.
Real estate developers’ assets rapidly grew as their property prices increased, which they used it to bid high prices for large plots of land and then sold properties at very high prices.
Recall of Global Catastrophe
During the world economic recession in 2008, developers in India cut prices and announced profitable deals like sponsored furniture and internet connections.
During the world economic recession in 2008, developers in India cut prices and announced profitable deals like sponsored furniture and internet connections.
According to a survey done by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) in May 2009 showed that demand for luxury homes dropped by 50percent and affordable housing demand dropped by 10percent. During the year to H2 2009, Delhi saw an abrupt drop in house prices by 13.08percent, which made developers to come-up with low-income homes.
However, India’s economy bounced back quickly and house prices started rising again.
Rise in Interest rate could remain
In September 2011, the RBI increased its basis points in lending rates by 25 to 8.25percent, which was the 12th interest rate rise, since March 2010 after it hiked rates from 4.75percent to 5percent to hold inflation.
The RBI’s primary lending rates are also moving up, to a low of 7.50percent and high of 8percent in July 2010 from 11percent and 12percent respectively. As of March 2011, the principal lending rates are 8.25percent as low and 9.50percent as high.
Justifying this, Finance Secretary RS Gujral said that the government is now focusing towards slowing growth and inflation and also added that as the inflation continues to be high at 9.87percent, the RBI may rise the rate again.
The construction sector is already seeing an increase in interest rates by 1.2percent in second quarter of 2011, which fell by 8.2percent from the previous quarter.
India’s small loan market
Regardless of changes since 1991, India’s mortgage market is facing many issues:
Regardless of changes since 1991, India’s mortgage market is facing many issues:
- Banks choose to offer loans to middle and high-income sectors, giving limited funding options for low-income individuals.
- The government has a huge power on chief domestic banks, thereby restricting favoring initiative.
- There is no proper legal outline for foreclosures
- Title hitches are extensive.
As a result, in 2010 housing loans were only 4.04percent of India’s GDP and the leading mortgage lender being the Housing Development Finance Corporation (HDFC) and the State Bank of India (SBI).
In 2010, total housing loans increased by 8.66percent, which accounted to Rs.3009.29 billion (US$ 61.21 billion) against Rs.2769.57 billion (US$ 56.33 billion) of previous year. Interest rates offered by major banks and financial institutions for floating rate mortgages varied from 10.75percent to 12percent and 13percent to 14percent for fixed-rate mortgages, while the loan to value (LTV) of most Indian home loans is 85percent.
Low rental yields
In the Global Property Guide report, rental yields continue to remain low in India and it was recorded that smaller apartments have higher yields.
- Smaller apartment prices at Mumbai are around US$11,600 to US$14,000 per sq. m and yields are meager at 2.52percent to 2.76percent.
- Smaller apartment prices at Delhi prices are cheaper at US$4,000 per sq. m. and yields are also low at 1.71percent to 2percent.
- Annual yields in Bangalore are fairly higher than in Mumbai and Delhi and the yields ranged from 3.48percent to 4.19percent.
According to Colliers data, residential rents from Q1 to Q2 2011:
- In selected Mumbai areas, rents increased from 2percent to 5percent.
- Bengaluru major residential property rents increased from 3percent to 7percent.
- Delhi prime residential property rents increased by 2percent – 4percent
- Rents in Chennai increased by 2percent to 5percent, because of rising demand and lack of residential properties
IMF sated that a viewpoint is remarkably indeterminate:
According to the International Monetary Fund (IMF), the Indian economy grew by an average of 8.3percent per year from 2003 to 2010. But, the country’s real GDP growth dropped to 7.2percent in 2011 and subdued in 2012.
According to the International Monetary Fund (IMF), the Indian economy grew by an average of 8.3percent per year from 2003 to 2010. But, the country’s real GDP growth dropped to 7.2percent in 2011 and subdued in 2012.
The real GDP expanded by 5.5percent y-o-y, during the first quarter (April-June) of the fiscal year 2012-13, which was the decades worst Q1 performance.
The IMF reviewed its GDP growth forecast this year for India to 4.9percent from 6.1percent. Similarly, the World Bank reviewed its GDP growth forecast for the country to 6percent in 2012 against the previous forecast of 6.9percent. On the other hand, the Reserve Bank of India (RBI), reviewed the GDP growth by 6.5percent this fiscal year.
The exports and imports in the country fell by 9.7percent and 5.08percent that accounted to Rs.2 trillion (US$38 billion) respectively and resulted in a wider trade deficit of Rs.831.3 billion (US$15.7 billion). India’s present account deficit stood at 3.9percent of GDP during the quarter end-June of 2012.
According to IMF, the country’s total fiscal deficit was 9percent of GDP in 2011 and it may increase to 9.5percent in 2012 and may drop faintly to 9.1percent of GDP in 2013.
According to Bloomberg, from 2006 to 2011 the average inflation was 8.7percent, which was an abrupt against the average inflation rate of 3.9percent per year from 2000 to 2005.
The IMF said that the viewpoint for India is remarkably ambiguous, hence monetarist policy should stay on hold until a continued decrease in inflation happens.
Restoration of economic policy
After Prime Minister Man Mohan Singh was re-elected in 2009, the government eased economic policies and gave way to more foreign investment.
The economic policy revamp includes the following:
- A 51percent stake in multi-brand retail stores are allowed for foreign companies
- The cap in broadcasting agencies on foreign stakes has been upraised to 75percent from 49percent
- 49percent of national airline carriers are allowed to foreign investors.
In order to tackle the country’s budget deficit and taper the deficit to 5.1percent of GDP this fiscal year ending in March 2013 from 5.8percent of GDP of previous year, subsidized diesel prices have been raised by almost 14percent, which is the first rise in 14 months.
13 comments
Good summary about Indian Real Estate Market, useful sharing..
ReplyDeleteThank You Mr Sudhakar.
DeleteCollected very good information..
ReplyDeleteThank You Mr Nani
DeleteThe construction sector will also grow up like as the other because the exports and imports in the country is not as previous few years.
ReplyDeleteAs per my knowledge 2013 was quite good for real estate market, some up-down came but still we can say its worth to invest in real estate.
ReplyDeleteOne more year has passed, Hope in this year the prices of apartments will fall down to reach the middle class people.
ReplyDeleteGreat. Very Good Post. If possible provide somemore updates about Indian real estate.
ReplyDeleteHay guys posted very good information about real estate. Keep posting info like this.
ReplyDeleteI think 2013 was went well for real estate industry people in Bangalore. There are many constructions started across Bangalore and yet to finish.
ReplyDeleteBriefly explained about the indian's real estate in different areas, Good collection on this...
ReplyDeleteAs the population increases the demand for houses also increasing in all over Bangalore.
ReplyDeleteA very good discussion on this topic. Keep on posting like this, I am regularly browsing this Blog.
ReplyDelete