‘Indian home buyers cautiously optimistic about property prices’
April 06, 2010
Affordability is not a concern for potential home buyers, points out an ICICI Securities survey conducted across Mumbai, Delhi (NCR region), Bangalore, Chennai, Kolkata, Ahmedabad, Hyderabad and Pune. It further suggests that healthy demand for houses at current prices with developers at inflection point can convert demand into transactions.
The report points out that Indian home buyers are mostly looking at new properties in upcoming locations. They are primarily interested in mid-income housing (Rs 20-50 lakh) and are conservative on ticket size. While the end-user demand is higher in Mumbai, Hyderabad and Bangaluru, investor demand is higher in Ahmedabad and Pune.
The under-construction supply in eight major cities is around 378 million square feet, of which 64 million square feet is ready. Current annual demand stands at around 372 million square feet. According to the report, per-month inventory for Mumbai and Bangalore is the lowest while it is the highest for Chennai and Ahmedabad. Finished inventory is higher in Ahmedabad, Hyderabad and Kolkata. Except in Pune, Bangalore and Hyderabad, prices in other cities have reached earlier highs or beyond.
Kolkata and Delhi are inclined towards a price rise vis-à-vis Hyderabad that is more inclined towards a price decrease. Perception of home prices being high is maximum in Mumbai and Pune. However, in Kolkata and Hyderabad, buyers expect prices to cool off in the coming months.
“We believe Mumbai and Bangalore-based developers, and those with higher component of residential, are better placed. HDIL and Sobha are likely to see healthier price realisations and sales in the medium term,” said the report.
The survey highlights that Indian home buyers are cautiously optimistic about the property prices. Approximately 53 per cent brokers have seen increased queries in affordable housing while 44 per cent have seen a drop in queries for the premium segment.
The survey says that rental market is stable and trending up as 53 per cent of tenants have seen rentals increasing in the past 12 months. Average increase in rentals stood at 4.7 per cent. Interestingly, Indian household spends 12 per cent of its monthly income on rentals.
