Property Prices Likely to Increase After Elections: Survey

Property prices in India are likely to increase only after six months when the country will get a new government, a survey said in Mumbai on Monday.

The Housing Sentiment Index (HSI) assessed by IIM Bangalore and Magicbricks.com forecasts that home buyers across 8 of 10 cities surveyed expect real estate prices to go up over the next six months.

Cities like Ahmedabad, Kolkata, Mumbai, Delhi, Hyderabad, Pune, Noida, Gurgaon, Bangalore and Chennai were surveyed.

"Indian real estate is bound to remain attractive in the medium term with faster growth expected in the Tier II cities. Competitively priced urban pockets such as Noida, where robust supply is backed with a promise of better infrastructure, received a thumbs-up from end users," Magicbricks.com business head Sudhir Pai said in a statement.

"However, active interest will take another six to nine months, since consumers expect prices to go up only after six months, post the 2014 elections," he said in a statement.

The national HSI remained positive at 108. An HIS score of 100 suggests that prices would remain static.

According to the survey, Mumbai posted a housing sentiment index of 106, turning positive for the first time.

"Healthy demand from Navi Mumbai and Thane resulted in this gain. Infrastructure developments in Navi Mumbai including Trans-Harbour Link and the proposed international airport are turning this location into an attractive investment option."

Bangalore topped the list of cities with an HSI of 140, witnessing a further 15 per cent jump in HSI from the previous quarter.

Strong demand from the infotech sector and comparatively affordable prices make this city an attractive option, the survey said.

Hyderabad, with an HSI of 97, witnessed a 4 per cent drop this quarter, after the Telangana issue weighed down sentiments in this city, it said.

"While the average waiting time has dropped to a little over eight months this quarter, the range-bound increase witnessed across cities and sectors indicate that people are awaiting election results to make real estate decisions."

"Clarity will set in, based on election results and well after the new government takes charge," IIMB-Century Real Estate Research Initiative lead researcher Uma Sitaraman said.