Decrease in New Residential Properties Noted

August 10, 2012 / Russell Legato, Residential Property Analyst

There has been a decrease in new residential properties that started in 2012, during that year’s second quarter. An announcement was made in Bangalore that a 44 percent decrease took place during that same period in 2012. They attribute it to approvals being delayed, projects being put off until a later date and a significant amount of inventory existing in some places.

Decrease in New Residential Properties Noted

A total of 17,500 units were launched. Of these, 70% were geared towards middle income people. Units in this price category are the most in demand from investors as well as potential homeowners. A 73 percent fall took place in new houses in the financial capital of India. Bangalore dropped by 67 percent and Chennai went down by 47 percent.

More reductions included Kolkata at 29 percent and NCR-New Delhi 24 percent. But, an improvement is expected soon because the demand will increase. Values will be stabilized by the developers offering options and desirable incentives to interest buyers.

Steady demand is reported in the residential sector in all major cities. Luxury residential units are continuing to be in high demand, for example in Mumbai. There has also been some appreciation in Gurgaon – NCR where a 10 percent rise in capital values occurred.

Areas like North and Southwest Bangalore saw an upturn of 13 percent and 10 percent. The Powaii suburb of Mumbai appreciated 12 percent during 2012′s second quarter. Compared to last year the cost of properties went up in all major cities surveyed. Bhopal rose 46.41 percent and Faridabad 44.74 percent. New Delhi saw an increase of 33.64 percent, Chennai 35.52 percent and Bengaluru 35.29 percent.

In September 2011 inflation soared up to 9.87 percent. Now the economy is predicted to continue to slow down from the 10 percent level seen in 2010. The economy in India grew from 2005 to 2007 at the rate of 8.9 percent as compared to the 7.6 percent growth in 2003 and 2004. As expected, growth rate has an impact on the housing market, especially how many new residential properties are sold.

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