Bengaluru sees 5% rise in housing prices in December quarter

Bengaluru has been the only city that continues to be in the green as per the national housing price index, shows data by the Reserve Bank of India (RBI), which analysed prices across four metro cities and all-India growth.

While the all-India growth has been around 2% in the second and third quarters of FY21, Bengaluru has grown over 5% year-on-year in the third quarter of FY21. However, Bengaluru has seen a decline in three quarters in the financial year after reaching a peak in the first quarter, when there was a growth of nearly 15% year-on-year.

The RBI came out with data on various macroeconomic indicators during its monetary policy announcement last week.

Shantanu Mazumder, senior branch director at Knight Frank India, says that Bengaluru is an end-user driven market and it is insulated from a lot of fluctuations. He adds that these numbers mean the prices of real estate have grown but not at a pace at which they were growing in the previous years.

"Because of Covid-19 and work-from-home, demand has picked up especially for ready-to-move-in houses. In such cases, they are willing to pay a premium," says Mazumder. "The base value has not reduced and developers are absorbing only the other charges," he says.

Delhi experienced negative growth while Mumbai saw negative growth in the second quarter but bounced back in the third. Chennai slipped into the negative after a continuous slip in the three quarters of the fiscal the RBI has measured.

“The real estate sector gained steam from Q3, particularly in rural and semi-urban areas and affordable segments in urban areas, on the back of lower mortgage rates, favourable pricing and slash in stamp duty across several states,” the RBI said in the policy document. “In residential real estate, new launches registered y-o-y growth for the first time in eight quarters during Q3:2020-21 while the inventory overhang moderated to an average of 55 months in Q3 from 73 months in Q2.”

The RBI also mentioned that in the personal loans segment, housing loans have seen a decline. “Personal loans segment, which has generally performed well in recent years, decelerated during H2 so far primarily due to a sharp slowdown in growth of housing loans, its largest component,” it said.