After bucking the overall downward trend in the real estate sector for quite a long time, housing prices in the Bihar state capital have finally started to capitulate.
Going by the latest residential index (Residex) released by National Housing Bank, Patna figures prominently in the list of 22 major cities out of the 26 tracked, to undergo a marked softening in the price of residential property.
The overall city index for the state capital with a base index of 100 in 2007 has now dropped to 147 during the quarter ending June 2013, after touching an all time high of 152 in March 2013.
In terms of price decline, the -3.29% fall may seem to be marginal. But the question haunting realtors and prospective buyers is, whether it is the beginning of a tapering in property prices or a signal of it entering a sustained lower spiral.
The picture becomes grim when viewed in the perspective of what is happening to apartment prices in different pockets of the city that has been divided into five zones by the NHB for a micro view.
For, the index for zone 5 that comprises of posh localities of East and West Boring Canal Road and RK Bhattacharya Road has now crashed to touch an all time low of 132 from a high of 170 in September 2011.
The sharp 10 point decline from 142 in the preceding January-March 2013 quarter has set alarm bells ringing.
Similarly, property price index for Patliputra Colony, Kidwaipuri, Krishna Nagar, Budha Colony (Part 1), forming major part of zone 3, has tumbled from an all time high of 148 recorded during the previous quarter to 139, registering a fall of nine points.
The index for emerging property hotspots like Bailey Road (New) and Gola Road, which has a slew of landmark development projects lined up, has also plummeted to 182 now, down by nine points, after registering an all time high of 191 in the preceding quarter.
Incidentally, the two localities have been clubbed along with Kankarbagh and Phulwari areas of the state capital.
However, localities like Nehru Nagar, Shivpuri, Patel Nagar and Anandpuri under zone 2 have defied the trend and registered an uptake of eight points at 138 in comparison to 130 during the January-March quarter, while the index for Akashwani-the only locality figuring in zone 4-continues to remain unchanged for the last three quarters at 144.
And if the admission of RV Verma, CMD of NHB, is any indicator, the rise in inventory of unsold property, in the backdrop of rising interest rates, liquidity tightening and slowdown, will continue to adversely affect the demand from end users.
Surely, individual buyers are also confused following the large-scale crackdown on builders and architects by the PMC. It has given them time to rethink on their investment decisions.
"After making rounds to construction sites, I zeroed in on a property in Delhi NCR this July, that too, at 40% discount to the going rate in some posh localities of the state capital," said Jayant Kumar, adding "The city is fast turning out to be an 'urban chaos'."
If his decision is any pointer, such an eventuality may turn out to be a major challenge for the government. The adverse impact would be telling on the construction led economy.
The indifference of buyers may even translate into a flight of money to destinations that are offering better facilities and living conditions, with more open spaces, at value for money prices.
No wonder, city builders are keeping their fingers crossed hoping that the recessionary trend is only temporary and would reverse once the situation shows signs of abating.
But the problem is: whether they have financial muscle to weather the storm building up in the wake of a demand slowdown.