Everybody cribs about how costly buying real estate in Indian cities is. It’s a national pastime of sorts. But nowhere is the collective griping greater than in cities like Mumbai and Delhi, where prices have moved northwards faster than the rest of the county.In comparison, realty prices in south India are saner and everybody, from banks to realty developers to the first-time buyer feels a lot more comfortable. Like RV Verma, chairman of the National Housing Bank (NHB) puts it, “For banks, Chennai and Bangalore are one of the best centres. They feel comfortable as these markets are stable and the potential for NPAs [non-performing assets] is lower.”The past year has seen home sales slow down across the country. The slump in sales has been pronounced in Delhi-NCR and Mumbai, over 40% compared to the previous year. A combination of exorbitant property prices and high home loan rates made buyers balk. Realty sales in south India were down too, but thanks to an improvement in the fortunes of the IT sector, not as sharp.“Bangalore and Chennai are still more affordable compared to other big cities,” says Hariharan Ganesan, manager, research at property advisory firm Jones Lang LaSalle (JLL) India.So what’s keeping prices in check in southern cities? “Scarcity and expensive land parcels have hit the affordability factor in Mumbai and Delhi. However, land is not priced out in the south,” says JC Sharma, managing director and vice-chairman of Sobha Developers, which had reduced property prices by 10% post-2008 slowdown.The north has also seen a rise in property prices because of the speculative nature of the market. It is also largely an investor-driven one. “In the north, a passion for real estate along with the need to park black money has pushed up property prices dramatically in recent times,” says Anckur Srivasttava, chairman of GenReal Property Advisers.Says Anshul Jain, CEO of DTZ India, a real estate consultancy: “Around 70% of the realty market in NCR-Delhi and Mumbai is investor-driven.” An investor-driven market sees more distortions and is less transparent. Residential property prices in Bangalore, Hyderabad and Chennai have seen a rise of 1-35% since the fourth quarter of 2009, says JLL in a recent report. In contrast, Mumbai and the NCR have seen residential values run up between 20% and 40% in the same period.Southern realty’s absorption rate has been helped by the cautious pricing strategies adopted by local builders. In contrast, in Mumbai and NCR, property prices have already crossed the peak levels of 2007. New launches in south India are still predominantly in the Rs 4,000 per sq ft range compared to many parts of the NCR and in Mumbai where project launches are in the Rs 7,000-10,000 per sq ft range.“We have seen stable sales in the south. Sales in the last fiscal were better here than in the north,” says Jackbastian Nazareth, CEO at Bangalore-based developer Puravankara Projects. According to real estate research firm Liases Foras, Bangalore sold 10.55 million sq ft of property in the March quarter, as compared to 9.16 million sq ft over the same period last year. Chennai’s property market registered a growth of 26% in the quarter.All this put together has meant that unsold inventory is far lesser in south. Chennai and Hyderabad have a total of 42.75 mn sq ft and 33.38 mn sq ft of unsold stock each. In comparison, Mumbai metropolitan region and NCR have 121 mn sq ft and 233 mn sq ft of unsold inventory, which will take at least 23-40 months to get absorbed, says Liases Foras.On the housing finance front, the southern cities accounts for nearly 40% of the nationwide disbursals of Rs 1.95 lakh crore (retail home loans) for 2011-12. “While Mumbai and Delhi-NCR have slowed down, Chennai, Bangalore, Hyderabad, Pune and Kolkata have led the demand for home loans,” says VK Sharma, chief executive officer of LIC Housing Finance.The commercial property segment also continued to be in an upbeat mode with Bangalore, Chennai and Hyderabad accounting for nearly 45% of India’s office stock, largely due to the IT and ITeS sector.“Commercial space supply in the southern cities is in line with demand. We have leased 99.4% of the office space and have an additional 7 million sq ft under execution,” says Raj Menda managing director of RMZ Corp, a developer. Demand was driven by IT and ITeS sector, with 64% of the country’s IT SEZs are housed in the southern cities.“With a total stock of nearly 140 mn sq ft in the major cities of south India, the vacancy rate by end 2012 is expected to be 16%, considerably lower than the pan-India vacancy rate of over 20%,” says a JLL report.