India has bagged third position among 53 countries where realty prices are high, with the nation witnessing a 12 percent surge in property prices during the first quarter of the year.
According to a price index survey conducted by global property consultancy Knight Frank, India came third to Brazil which had the strongest annual growth at 23.5 per cent. Brazil was followed by Estonia at 13.9 percent. Ireland recorded the weakest at minus 16.3 percent.
Despite low housing demand that was led by an increase in interest rates and in property prices to cover construction costs in India, housing developers still added the cost escalation clause in sales agreements. This eventually gave rise to an increase in home prices.
"Though demand fell a little, it was good enough for developers to raise prices," R R Singh, director-general, National Real Estate Development Council, said to Business Standard.
Meanwhile, the property bubble in China continues to deflate, with home prices said to have dropped 0.3 percent from April 2012 onwards. Despite the fall, Beijing government has decided to stand by its property measures that have been exercised during the past two years. The nation currently stands at 34th position, with its annual growth recorded at minus 2.2 percent.
"Lending restrictions, new taxes, the curbing of multiple property purchases, and new regulations to restrict the inward flow of hot foreign money have had the desired effect," Nicholas Holt, Knight Frank's Director of Research in Asia, said in a report.
On the global level, house price index was at its weakest at 0.9 percent till March 2012. Knight Frank said that it was the first time that global house prices had dropped below 1 percent since 2009.
The report factored in several reasons as cause for the drop. Weak GDP forecasts, growing concern for weak global economy and the economic uncertainties in Eurozone are amongst the reasons that hampered purchase decisions and weakened the overall consumer confidence.
Moreover, the ongoing debt crisis across Europe has resulted in unemployment in various sectors, and has thereby lowered demand to buy properties.
The house price index may shows signs of improvement possibly in the second half of 2013, should Europe resolve the economic and political crisis in its nations.