Prices of property in India remain strong

Recent figures from the Reserve Bank of India have found that property prices in the country have remained remarkably resilient in recent months with price rises in the third quarter of 2011 rising in all but one location.

The report also found that the demand for home loans remains strong and that mortgages are ‘one of the fastest growing segments’.

Demand for home loans remains ‘robust’ despite interest rate rises

The Reserve Bank of India’s (RBI) most recent macroeconomic and monetary development report found that prices of property in the country continue to rise despite steep increases in interest rates.  According to RBI data, interest on home loans has gone up by between 1.5 and 1.75 per cent since December 2010 with the RBI having increased key policy rates 13 times since March 2010.

A RBI official reported that: “Despite home loans becoming costlier, the demand for home loan remains robust. Home loan remains one of the fastest growing segment and we have not witnessed any decline in home loans.”

Prices rise in eight out of nine Indian regions

The quarterly RBI’s House Price Index (HPI) is based on property transaction data collected from registration departments of state governments across India.  The Index now covers nine cities and showed an increase in property prices in all cities during the quarter June – September 2011 with the exception of Bengaluru.

The report said: “Property markets are facing moderation in demand, but price correction has not occurred as real estate firms are holding land banks and slowing new launches and sales to retain pricing power.”

The data on volumes of transactions for the same period also shows increases in the number of property deals in six cities, except Mumbai and the recently included cities of Kanpur and Jaipur.

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