Real estate markets witness over 10% increase in property prices post Q1

BANGALORE: All major real estate markets have witnessed an over 10% increase in property prices over the last quarter.

This, coupled with stiff interest rates and bleak growth, is increasingly worsening the affordability ratio especially in residential spaces in Mumbai and the NCR, says Religare Institutional research.

"Real estate market continues to remain under pressure given weak economic growth, unfavourable affordability levels, tight liquidity and execution-related issues. These issues coupled with investors looking to exit projects may lead to higher discounts being offered during festive season," says the brokerage firm in a recent report on Indian real estate.

While volumes remain low in Mumbai, a few instances of hikes in sales price by 10% have been noted, Bangalore remains the steadiest market with volumes and prices moving in tandem. However, new launches has moderated across cities particularly in Mumbai followed by Gurgaon.

"Given the weak economy and execution risks, we see early signs of pressure on property investors in key markets which could lead to high festive-season discounts. Affordability levels may worsen as compared to 2008 levels if growth declines. With property prices remaining high, a drop in income growth may adversely affect affordability," says Religare.