Chennai's central business district saw the highest price increases due to surging demand, according to NHB Residex, an RBI-supervised mechanism that tracks housing prices in 15 cities. However, prices in North Chennai - Tondiarpet, Perambur, Dr Radhakrishnan Nagar and Narayanappa Garden - saw a fall due to slow infrastructure development.
Despite the economic slowdown, high interest rates and inflation, prices of houses in the city's hotspots -- Anna Nagar, Kilpauk, Nungambakkam, T Nagar and Adyar -- have been rising. Prices in areas close to Nehru Nagar, Chepauk and Marina rose 62% compared to the quarter ending this June. "Chennai's residential market is expected to see unabated growth during the next few quarters. Active demandwillbeconcentratedin locations closer to the city centre," a recent Cushman & Wakefield reportsaid.House pricesin Chennaihavejumped 9% in the third quarter compared to the quarter ended June.
Prices in Virugambakkam, Anna Nagar, Kilpauk and Nungambakkam have quadrupled since 2007, when the National Housing Bank (NHB) begun the Residex for Chennai. The demand for residential units in Chennai is likely to see a compounded annual growth rate of 11% during 2011-2015.
Real estate consultants blame limited supply and huge demand for property for the surge in prices in the central business district. The city, awaiting the metro rail, monorail and extension of MRTS,willcontinuetosee demand for property near these infrastructure developments, and a surge in prices seems natural.
"In areas like Adyar, Anna Nagar, Boat Club and Nungambakkam demand is high because people want to buy property in places they have been living in for a long time. Another factor that boosts demand and reflects in pricing is the premium schools in those areas. Supply in these areas is low compared to the demand and so prices have shot up.
In Chennai, schools play a big role in residential demand and people are ready to pay premium pricesfor those areas," said S Ramaswamy, associate director, Recs Group, a real estate consultant.
Prices in Delhi have increased the most followed by Chennai and Mumbai, while Kolkata witnessed a decline over the previous quarter. Prices in tier-2 and tier-3 cities like Kochi, Lucknow, Ahmedabad, Surat and Bhopal saw a quarter-over-quarter decline.