NHB Residex shows increase in home prices across 12 cities

NEW DELHI: Despite banks and private equity funds putting pressure on developers to reduce home prices, the National Housing Bank's residential housing index, Residex shows an increase in prices in the April-June 2011 quarter across twelve of the fifteen cities it tracks.

The cities which have shown the maximum increase are Bhopal (33.73%) and Faridabad (33.38%) followed by Kochi (24.30%), Surat (16.60%), Delhi (16.29%), Chennai (13.39%), Hyderabad (9.93%), Bengaluru (5.07%), Mumbai (3.33%), Ahmedabad (2.45%), Lucknow (2.16%), Pune (1.10%).

There has been a rapid increase in the price of land in some of the smaller cities in the country, said RV Verma, chairman, NHB.

A big factor in this increase in prices is the fear that the land acquisition bill, when passed, is expected to increase land prices as it will make acquiring land more difficult.

“So a lot of buyers are not investing in properties outside cities thereby increasing rates within these cities,” he adds.

In addition to this, the cost of construction materials has had an impact on the supply side. Prices of homes have gone up even as margins of developers have been squeezed in many cities.

Cities like Faridabad have seen tremendous growth in home prices in the last quarter buoyed by infrastructure growth.