Stubbornly high mortgage rates coupled with high real estate prices pushed down NHB Residex – an index used to track the movement of prices in the residential housing segment, for Chennai during the March quarter.
The Residex, developed by the National Housing Bank with inputs from RBI and CSO tracks the movement in prices of residential properties on a quarterly basis since 2007. Chennai’s index for the January-March quarter was 310 as against 314 during October–December 2012. The base year for the calculation of the index is 2007 and the base is 100.
Of the 10 residential zones in the city as computed by NHB, in 6 zones real estate values fell while in one it was unchanged and in three there was an increase. Prices dropped the most in Mylapore, Adyar, Velachery and Thiruvanmiyur by nearly 11% between October-December quarter and Januaryâ€”March quarter.
“Prices were tepid earlier this year. High interest rates forced buyers to hold back purchases. But overall there is a recovery in the markets in the past few weeks as buyers expect a cut in lending rates for home loans.
Residential prices witnessed a rise in Mumbai, Bangalore and Delhi while it dropped in Chennai and Kolkata. “We are witnessing slowdown in sales. This has resulted in developers dropping prices. The Residex was rising for 11 quarters and has dropped for the first time since then.
“Smaller real estate players are in a trap as there isn’t enough bank funding for projects which were linked to cash flows from sales, therefore delaying project completion.