REALTY FORECAST Rating agency says city prices won't rise, builders disagree Mumbai saw steep recovery in prices after a 2008 correction... demand has slowed since Dec '09.

Mumbai: Planning to buy a house in Mumbai this year? You can take all the time you want.

A research report by leading rating agency Crisil on prices of residential properties in India's 10 biggest cities has said prices in Mumbai will not rise this year but will, in fact, dip, if only marginally, by 0.4 per cent.

Bangalore and Chennai will see the maximum hike in prices, by 7.3 per cent and 5 per cent respectively, while the National Capital Region (NCR) will see a 2 per cent rise. Ahmedabad, like Mumbai, will see a correction -- by 1.8 per cent.

The correction in Mumbai will be the result of the sharp increase in prices in 2009. Rates here had shot up by 11 per cent from March to November last year, the report said. While central Mumbai witnessed a rise of 21 per cent, the central suburbs saw prices go up by 15 per cent.

“The city has already seen a steep recovery in prices after the correction in 2008, and the demand has slowed down since December 2009,“ said Sudhir Nair, head, Crisil Research. Developers, however, aren't buying into this. “We have not seen any drop in demand. I believe it will go up by 30 per cent this year,“ Niranjan Hiranandani, vice-chairman and MD, Hiranandani Construction, said.

“Mumbai is so starved of volume that unless land supply increases, prices cannot drop,“ Dharmesh Jain, CMD, Nirmal Lifestyle, said. “Considering the rate of inflation, we expect prices to go up by 5-12 per cent in 2010,“ he added.

The rise in Bangalore and Chennai is on account of the recovery of the Information Technology sector after the slowdown. “Demand and prices did not go up in Bangalore earlier as the IT sector was still recover- ing. Confidence is back now, leading to demand in those areas,“ Nair said.