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Property Prices Fall Across 7 Cities

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With residential property rates falling, buyers can heave a sigh of relief! Going by the National Housing Bank's Trend and Progress of Housing in India (2010)  report and the housing price index or RESIDEX (January – March, 2011) released on Friday, property prices in seven cities across India saw a fall of 2.63 per cent to 17.6 per cent during the January to March quarter. Another five cities are showing a marginal change in prices in the same period. However, three cities, Pune, Lucknow and Delhi, showed an increase in property rates by 2.6 per cent to five per cent.

NHB RESIDEX covers the residential properties in different parts/locations of the cities. It estimates the value of the property to be financed and assesses the adequacy of security cover on the outstanding loan. The Residex for the first quarter of the 2011 calendar is a comparative study with the previous quarter.

The latest NHB Residex results are in contrast to the previous quarter data. During October to December 2010, property prices went up in 13 out of the 15 cities surveyed, compared with the July to September 2010 data. In the remaining two cities, prices had either remained the same or dropped marginally. NHB is planning to add another five cities to the Residex this year, taking the number of cities being covered to 20.

When asked about the possible range of property price correction in the coming months, NHB chairman RV Verma said:  "We can't hazard any guess on property price correction as it may impact the market."

He added: "There are blips in the property market."

NHB's trend report has analyzed the impact (during the year 2009-10) of the operations of Housing Finance Companies (HFCs), Scheduled Commercial Banks and the co-operative sector on the housing sector and the housing finance in the country.  
‘Affordable housing for all' --- the national policy of the government of India--- seemingly caught the attention of the stakeholders, builder community and the lending institutions.

To support the cause of ‘Affordable Housing', NHB seeks to pursue its interventions and partnerships with National and State Governments in implementation of various financial sector-related programmes and schemes.The report highlights an exponential growth in housing finance during the last five years with the Compounded Annual Growth Rate (CAGR) around 28 to 30 per cent, due to the participation of banks in the housing finance sector.

The Wholesale Price Index (WPI) measured inflation at 8.6 per cent in January, 2010 as against 5 per cent in January, 2009 on year-on-year basis. The bank credit growth on year-on-year basis was 15.1 per cent during 2009-10 compared to 19.8 per cent during 2008-09.

The National Sample Survey Organization's (NSSO) Reports on Housing Conditions and Amenities in India based on the 65th round survey during July 2008 to June 2009 comprise of the report, with the focus on quality housing, ownership vs rental housing and the housing and the infrastructure conditions in the slums.

The housing loans registered a growth of 20.79 per cent during the year March 2009 to March 2010. The Net Owned Funds of the registered HFCs recorded an increase of 26.41 per cent.

The Regional Rural Banks (RRBs) have emerged as an important channel for rural housing in the report.
NHB sanctioned Rs. 2.25 crore for Housing Micro-Finance (HMF) lending, during the year.

Rs 70,640 crore worth home loans were disbursed by public sector banks during 2009-10 . This was mainly on account of low interest rates that prevailed during the major part of the financial year 2009-10 and teaser rates also played a part in that.

At the end of March 2010, the outstanding housing loans of banks and housing finance companies stood at Rs 3.16 lakh crore and Rs 1.53 lakh crore.