Here is some good news for those planning to buy a new house. A study by leading international property consultancy Knight Frank ranked India 47th among 56 countries in terms of appreciation in home prices. According to Knight Frank’s latest Global House Price Index Q3 2019 report, released on Friday, for the 12-month period ended September 2019, home prices in India grew a meagre 0.6% compared to an average 3.7% in the sampled countries.
India was at the 11th position in the previous edition of the report, Global House Price Index Q2 2019, with a 7.7% year-on-year increase in home prices.
Prices increased 1.6% in the six-month period ended in September 2019 but dropped to 0.7% between July and September 2019, showing a slowdown during the monsoon months.
“During the last four years, the growth in residential prices in most of the top eight cities of India has been below retail inflation growth, which has helped in keeping the end-user interested. Liquidity crunch, high inventory overhang, and overall sluggishness in demand have played their part in rationalising home prices. Real estate developers are focussing on keeping the prices realistic, with right-sizing products, which is helping in attracting end-users and improving buyers’ confidence,” said Shishir Baijal, chairman and managing director, Knight Frank India.
Slow sales, high inventory, and lack of liquidity with developers have restricted rise in home prices. Also, regulations imposed by the government to ensure accountability in the system such as the Real Estate (Regulations and Development) Act, 2016, Goods and Services Tax and the Benami Transactions (Prohibition) Amendment Act, 2016 have laid the foundation for a healthy end-user market.
A property broker says: “Earlier, every building project used to attract investors who would literally finance its construction. With new rules, fewer investors are seeking real estate as an investment and that has weakened demand, leading to weaker prices.”
The Global House Price Index tracks the movement in mainstream residential prices across 56 countries and territories worldwide using official statistics. Hungary leads the index this quarter, with 15.4% annual price growth, followed by Luxembourg at 11.4% and Croatia at 10.4%. Seven of the top 10 rankings were European countries and territories. The three other countries/territories in the top 10 were China, Jersey, and Mexico.
Prices across 56 countries and territories worldwide rose at an annual rate of 3.7% on average, which marks the index’s slowest rate of growth for over six years. More than 90% of countries and territories registered static or positive growth in the year to September 2019.