The residential market in the country saw sluggish demand for the most part of 2011, after an initial spurt in the first few months of the year.

A report by Global Property Consultants CBRE South Asia, India Residential Market View - 2011 said that while the residential markets crosswise NCR and Mumbai saw stable growth in rates during the revival period from 2009 to first half of the last year, the second half of the year fetched doldrums in overall rates.

Numerous repo-rate adjustments by the central bank, which resulted in upward review of mortgage rates, stiffer control on teaser rates earlier being offered by financial institutions to lessen EMI load in the early years of a loan term, and inflationary forces affected end user plus investor outlook by 2011 end.

This together with supply pile-up causing sliding pressures on capital values crosswise various micro-markets in these major parts.

Whilst the year 2012 commenced on an optimistic note with the central banking institution cutting repo rates by 50 bps for the first time in several months, the impact on demand rejuvenation might be limited.

Mr. Anshuman Magazine, Chairman & Managing Director, CBRE South Asia Pvt Ltd stated, “During 2011, we witnessed initial buoyancy in the real estate market as investor and developer sentiment improved, riding on the high residential demand wave. However with repeated interest rate hikes, rising prices and prevailing economic conditions, the market saw a dip in sales towards the middle of the year.”

This resulted in a supply pile-up in the major markets of NCR, Mumbai and Bangalore, causing capital values remaining flat crosswise different micro-markets in these three leading centers.

"While the recent rate cut by the RBI has helped generate positive sentiments in the market, stagnancy in demand will continue in the short to medium term unless there is an overall improvement in the economic scenario," Mr. Magazine added.