But salaries have risen faster. The same period saw the average borrower’s salary rise from Rs 2.45 lakh to Rs 8.3 lakh. As a result, affordability – measured by the home price as a multiple of annual salary – has improved .

The borrower, who on an average needed 5.1 times his annual salary to buy a house in 2002, needed only 4.8 times his annual salary in 2011.

The affordability figure is a national average and over the years HDFC’s borrower profile has also changed with more loans being disbursed in smaller cities. However, the long-term trend in affordability holds true for most cities because of high levels of income growth in the first decade of the 21century. The country’s per capita income has tripled from Rs 19,040 in 2002-03 to Rs 53,331 in 2010-11 .

The increase in affordability would mean that housing and housing loans will continue to grow in coming years. Considering that there is a housing shortage of 26 million housing units according to Jones Lang Lasalle, the potential will last for some time.
If affordability has improved for home purchase, it is has jumped for rentals. “Around 2001-02, a one-bedroom apartment in Andheri costing Rs 22 lakh would fetch a rent of Rs 8,000 to Rs 9,000. Today, the market value of the same apartment is over Rs 1 crore, but the rental income is at best Rs 25,000. Rentals have not kept pace with house prices,” says Deepak Mehta, a Mumbai-based real estate broker who specializes in the suburb of Andheri.

Leasing increasing
Rentals in South Extension (I & II) rose by 9.10 per cent, Karol Bagh by 7.7 per cent and Connaught Place by 4 per cent on account of increased enquiries from retailers and some significant leasing activities.

Vastrapur rents in Ahmedabad up 33%
Vastrapur in Ahmedabad recorded the highest growth in mall rents at 33 per cent over last quarter mostly owing to renewals of existing tenants at a higher value, while A.S. Rao Nagar in Hyderabad saw highest increase in high street rentals at 26.7 per cent, the report revealed.

US$17,000 a month rent
“The apartment is suitable for a family or company executives,” reads the property agent’s blurb.Monthly rent? A mere US$17,000 (Dh62,442).

Deep pockets needed
According to various Mumbai real estate agents, anyone with a budget of less than half a million dollars for a small one/two-bedroom apartment will be priced out of south, central and west Mumbai all together.

That seems quite lot in a city that can’t even offer clean water for most of its residents, proper roads or parks suitable for children.

It seems every inch of this island city has a high price tag. Recently there were reports of 10 square metre slum shacks being sold for $40,000.

It’s a city with a property bubble about to burst.
“Although some level of correction did take place during the slowdown, market activity over the last year and a half and reports indicate that prices have once again escalated to their peaks, keeping most projects out of the customers’ reach,” says Sachin Sandhir, the managing director of the Royal Institution of Chartered Surveyors (RICS) South Asia.

high inventory of unsold flats “There is now a high inventory of unsold flats in the city, the reason clearly being over-pricing. Since most larger developers have considerable holding capacity, they have remained unyielding on their asking rates and now seem to have overplayed their hand,” says Om Ahuja, the chief executive of residential services at Jones Lang LaSalle India.

Who blinks first
“Developers are offering discounts on the bargaining table, but remain firm on their officially quoted rates since lowering them would signal to the market that the long-awaited correction has finally arrived. However, we are seeing some relenting from investors who are saddled with non-moving properties and are desperate to cash out,” says Mr Ahuja.

Investors prepared to take a short-term hit
“Sentiment has been impacted due to inflationary pressures and rising interest rates, which are only now starting to come down marginally,” says Mr Sandhir.

“Slower GDP growth rate projections; shortage to the tune of 85 per cent in property and construction professionals available today, as highlighted by a recent RICS research and high debt burden of property developers have also impacted investor confidence in the sector.”

Elsewhere in the country, while prices are nowhere near Mumbai’s level even in the capital Delhi, potential home buyers are – it seems – staying at home.

“Overall, with interest rates rising and the cost of Indian home loans, coupled with continued price escalations, oversupply has set into the residential market in areas such as Delhi and National Capital Region. While markets in the south look to be relatively stable,” says Mr Sandhir.

How did Mumbai become one of the most expensive cities?
It has been bursting at the seams for years. The surface area of Mumbai and its suburbs is almost 500 sq kilometres, but only 90 sq km of it is usable, the rest consisting of forest, government-owned land, salt caverns or other unusable land, according to the property research firm Liases Foras.

A city of nearly 21 million people
Mumbai is India’s densest populated city with 27,000 people per square kilometre, and the brokerage Anand Rathi Research says the city will need an additional 30 sq km of residential developments by 2021.

Scarce commodity
Land, a scarce commodity and increasingly short in supply, is proving to be a severe operational headache for real estate companies.

Prices rising
What Kolkata witnessed over past year will surely beat everyone’s imagination. Prices have gone up 50-60 per cent in certain pockets, while in certain other select areas of the city, the increase has been as high as 200 per cent in just over a year.

Chennai prices up 30%
Chennai has seen a 30 per cent rise in land prices within city limits over the past year, while land prices in Bangalore have historically held steady and never seen an alarming rise. In the case of Mumbai, it has remained flat over the past year due to liquidity crunch.

Bangalore land prices steady
According to him, unlike Chennai, where land prices have risen sharply, Bangalore has held steady in terms of prices over a longer period. “That enabled a larger supply of apartments into the market and more buyers could aspire and actually buy. If we have to make it appealing to a vast segment of buyers in Chennai, then we have to move far away from the city, but the problem of social infrastructure creates a totally new set of problems,” adds Krishnan.

Kolkata land prices up 60%
Among the cities with highest price rise, Kolkata squarely beats all others. Rishi Jain, director of Jain Group, says there has been a 50-60 per cent rise in land prices in and around Kolkata over the last three-four months. “In some of the prime localities, land prices have gone up by even 200 per cent,” says Jain.

Will commercial banks cut rates?
It is hoped that commercial banks will cut interest rates so that Indian home loans become affordable. High cost of funding is one of the main causes of rising real estate prices in India.

Pick up in sales now expected
Mr Anurag Mathur, Managing Director, Cushman & Wakefield, India, said ‘For the whole of last year, end buyers had to defer their purchase decisions as they were facing the double-edged sword of rising interest rates and stubborn price levels. Whilst some of these buyers may still hold out for a while longer to see if there are further rate cuts, we expect to witness some pickup in the volume of sales transactions.”

Marginal increase in home loan borrowings
Mr Om Ahuja, Chief Executive Officer – Residential Services, Jones Lang LaSalle India, said, We do expect that there will be a marginal increase in home loan borrowings because of this positive move. It is unlikely that property prices will come down because of this rate cut, and it is the price of properties that is the decisive factor.

Ahmedabad real estate bucks the trend
A pan-India study suggests that while cumulative office space absorption for the top eight Indian cities fell 32 per cent in the first quarter of 2012 as compared to previous quarter, Ahmedabad bucked the trend.

“The first quarter of 2012 noted absorption across top eight cities at 7 million sq ft registering a decline of 32% over last quarter and 6% over the corresponding period last year.

Mumbai and Kolkata were the only markets showing a rise
However, Mumbai, Kolkata, and Ahmedabad were the only markets showing a rise in absorption at 35%, 33.7% and 5.6% respectively,” says a report by real estate consultants Cushman & Wakefield.

Bandra’s Carter Road, Bandstand and Pali Hill are trying to catch up with Cuffe Parade and Malabar Hill. Prices in these upmarket suburban enclaves here have spiralled to between Rs 40,000 and Rs 60,000 a sq ft from Rs 15,000 per sq ft only six years ago.

In a recently completed luxury building on Pali Hill, which was recently mired in controversy over construction violations, the developer is believed to be quoting a mindnumbing Rs 75,000 sq ft (carpet area) and has sold apartments at close to Rs 40 crore each.

Recently, a 1,140 sq ft flat (carpet) on Pali Hill was sold for Rs 7 crore. A sea-facing apartment of similar size on Carter Road has received offers of up to Rs 9 crore-the owner wants Rs 11 crore. Elsewhere in Bandra-Khar , the average rate is Rs 25,000/sq ft.

Even tiny one-BHK flats in old buildings are being quoted at Rs 1.5 crore while 2-BHKs command around Rs 3 crore. In brand new towers , builders demand 20% to 40% in cash upfront, encouraging only those with black money to invest.

Hold the controversial Regional Plan
The “freeze” orders were issued by the Goa government’s Town and Country planning department in a circular issued today, after Chief Minister Manohar Parrikar’s decision to put on hold the controversial Regional Plan 2021, a proposed land use document which activists claim has been rigged in favour of the real estate lobby.

March 20 set as a cut-off date
“All proposals would be kept on hold till the government takes appropriate decision in this regard,” Chief Town Planner S Putturaju told reporters here, adding that March 20 had been set as a cut-off date for the decision.

“We have asked all the officials in TCP including its branches to stop issuance of no objection certificates (NOCs) till further orders,” the official further said.
The RP2021 had hit controversy with the BJP, which was then in opposition, as well as civil society groups claiming that the Congress-led coalition government had rigged the land use document in favour of the real estate lobby and had illegally converted several agricultural areas into construction zones..

Collector rates are the minimum floor rate one needs to pay in order to register a property. In order to bring some parity in the upmarket residential and commercial areas with the district administration has decided to bring in a balance in the hikes by increasing marginally in areas where the circle rates are already high and increasing up to 15% in areas where there is scope.

This, according to market analysts, would be a boost to the genuine home buyers in more than one way.

According to Ramesh Menon, a real estate analyst and founding director, Certes Realty Ltd, the overall prices might not be affected greatly by increasing the circle rates. “By increasing the white component in a property, the home buyer would be able to borrow higher amounts. Also, with the market being driven largely by investors, increasing the circle rates will encourage genuine home buyers,” explained Menon.

Added Santosh Kumar, CEO – Operations, Jones Lang LaSalle India, that there might be immediate apprehensions about the prices but in the long run, hiking circle rates would only bring in more transparency.

“Property rates are more based on the demand and supply rather than simply circle rates. For a home buyer in the primary sales market will have to shell out extra after the stamp duty and registration fee are hiked. However, for the secondary sale market, this revision in circle rates would be a slight deterrent for the seller as he will have to show and pay tax on a higher white component,” said Kumar.

Nevertheless, some speculated that instead of hiking the circle rates, the state government should rein in some regulatory mechanism to cap the abnormal hike in property prices.

“It is good to say that by hiking circle rates, the government would bridge the gap between the speculative market rates and government rates. However, this only reinstates the over-priced real estate market and benefits the builders’ lobby. The state should bring in a regulator to put a cap on prices and bring in an alternative market of government-owned plots by HUDA. It should promote concepts such as budget homes for the common man,” said Bhawani Shankar Tripathi, governing member, Mission Gurgaon Development.

Going only by GDP growth, the wealth report says Mumbai and New Delhi will rank among the top 20 global cities in the next decade. While Mumbai is ranked 16th, New Delhi is ranked 20th in the list of cities surveyed in terms of economic activity, political power, quality of life, and knowledge and influence.

Surat and Nagpur cities to watch
The report also named Surat and Nagpur among the fast-growing cities to watch out for by 2050.