India's housing markets mixed

Interest rate rises are beginning to bite in India, and housing markets in major cities weakened in 2010.

Yet this hasn’t broken the clear pattern since the relaunch of the National Housing Bank residential property index (NHB Residex) in 2007:

* successful growing cities have seen house prices rise rapidly (Chennai, Mumbai, Pune, Faridabad)

* prices in some other cities have fallen strongly (Jaipur, Hyderabad, Kochi, Bengalaru).

The contrasts are really striking. House prices have more than doubled in Chennai from 2007 to today (with the index moving from 100 to 204). During the same period the house price index fell from 100 to 66 in Jaipur.

One explanation is that cities relying mainly on electronics and manufacturing suffered most during the global financial crisis, while cities with offshoring and business process outsourcing (BPO) showed resiliency – but that is not the whole story, and does not explain the strong house-price falls over the past 4 years in Bengalaru (now recovering). 

Source: Global Property Guide