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"There has been softening of prices in the housing market in some cities including NCR region. This trend may continue for some time. Last year, there was a correction of about 5%," NHB Chairman and Managing Director R V Verma said after releasing Report on Trend and Progress of Housing in India for 2012.
The price correction in NCR has happened because of over-supply, he added, but said it was difficult to predict by how much prices could correct this year.
There has been up to 4% decline in the prices of houses across 11 cities but rates rose marginally or remained stable in 9 cities.
According to NHB, the housing loan market was about Rs 6.61 lakh crore at the end of March 2012. Of this, housing finance companies' contribution was about Rs 2.60 lakh crore.
Despite a slow growth in Indian manufacturing and services sector, the housing sector was not impacted by the slowdown because of regulators monitoring by specifying capital requirements, applying adequate risk management systems and maintaining the asset quality, the report said.
As per the latest government estimates, the housing shortage in the urban areas is 18.78 million units. The housing trend during the year witnessed particularly supply constraints while the demand for retail housing loans has been significant during the year. The main drivers include the growing middle class and urbanization amongst others.
However, the constraints in the supply include the unavailability of land, finance at reasonable rate, infrastructure, legal and regulatory framework and the limitations of the private and other stakeholders to provide low income housing. There has been a steady growth of the housing sector due to enhanced risk management system, a constant vigil on the exposure limits, capital requirements and asset qualities.
