House price stable in Apr-Jun according to RBI report
According to a recent report released by the Reserve Bank of India (RBI), the housing prices in India had softened in the first quarter of the current fiscal (Apr-Jun 2013) compared to that of the last quarter of the previous fiscal (Jan-Mar 2013). However, the property rates were up by about 13.75 percent from year-ago levels.
The quarter-on-quarter growth in the RBI’s house price index at all-India level was lower at 0.89 percent during the Apr-Jun 2013 quarter while the prices in the previous quarter had increased by 2.46 percent. The RBI has stated this in its report named – Macroeconomic and Monetary Developments, Second Quarter Review 2013-14.
Price correction in major cities
According to the report, the maximum hike in house prices was recorded in Lucknow (4.66%), followed by Ahmedabad (4.47%) and Kochi (2.28%) on a quarter-on-quarter basis. It remained almost same in prime cities such as Mumbai (0.28%), Delhi (0.79%), Chennai (0.61%) and Bangalore (0.23%). Kanpur recorded a fall of 9.35% in the Q1 of this fiscal compared to a fall of 2.11% in the last quarter of the last fiscal. The values clearly show that the real estate market has seen considerable growth in tier II cities compared to the metro cities.
On an year on year basis, Kochi and Lucknow saw the highest hike of 28.55% and 27.56%, respectively. Delhi witnessed 21.15% increase while Mumbai saw an 8.38% increase in house prices.
Service sector exhibits moderate growth
As per the report, the services sector exhibits moderation in growth. Though this sector has recorded the lowest growth in 11 years at 6.5% during 2012-13, it remains as the key contributor to the nation’s overall economic growth.
Among all the sub-sectors classified by RBI, the sectors which performed very low reflecting weak market sentiments during the year include ‘financing, insurance, real estate & business services’ and ‘trade, hotels, restaurants, transport & communications’.
RBI house price index
The RBI’s house price index is a weighted average of city indices, weights based on population proportion. The values obtained in 2010-11 fiscal is considered as the base value. The RBI compiles quarterly house price indices for nine major cities including Mumbai, Delhi, Chennai, Kolkata, Bengaluru, Lucknow, Ahmedabad, Jaipur and Kanpur. This index is used in tracking down the property price movements for various cities.
What would the future hold?
Based on the data compiled by the RBI, it is expected that modest improvement in growth would be seen in the last two quarters of the current fiscal, as there would be a rebound in agriculture and an improvement in exports. By the end of the financial year, a better recovery can be expected followed by good monsoon and accelerating exports.
