Smaller cities see big gains: Home prices on the rise despite note ban

Demonetisation did not choke the real estate sector, according to data released by the National Housing Board (NHB).

As many as 26 of 50 urban hubs across the country have shown a moderate upturn in housing prices between December 2016 and March 2017, an NHB index has said.

The list covering metros, state capitals and smaller cities indicated demonetisation did not strangle the real estate sector after the announcement by Prime Minister Narendra Modi on November 8. The months after the announcement had seen a severe shortage in cash transactions. Several sectors had said they were severely affected as people put off purchases.

But the NHB Residex Index showed there had been big gains in smaller cities. Prices went up 10 per cent in Visakhapatnam and Raipur, while Kanpur saw 8 per cent growth. Bhubaneswar saw the highest growth of around 11 per cent in the three months, while Chandigarh saw a rise of 6 per cent.

Even metros saw an uptrend. Prices in Mumbai were up 3.6 per cent, Bengaluru by less than a per cent and Chennai by 1.5 per cent. Thane saw a 2 per cent increase. Prices in Ahmedabad were the same as in December 2016.

Delhi, however, reported a fall of 6 per cent. Gurgaon, according to the index, bucked the trend, with prices moving up by 6 per cent in the period. However, prices in Greater Noida went down. Kolkata saw a 7 per cent decline and Hyderabad 2 per cent.

NHB Managing Director Sriram Kalyanaraman said: “It is clear from the trend that the adverse impact of demonetisation has been overstated. A large number of cities showed growth in prices, especially smaller cities.”

What is clear from the index is that smaller cities such as Vijaywada, Vadodara, Nashik and Pune, among others, have shown robust growth.

The data was computed from prices sourced from banks and housing finance companies based on their valuations during loan origination. Residential properties between 100 sq ft and 10,000 sq ft were considered for the study, covering 50 cities.

The NHB data also showed some interesting trends. Prices in Delhi, Gandhinagar and Dehra Dun were lower than those in June 2013.