National Housing Banks RESIDEX : Indian Real Estate Price Trends ..!

Keeping in view the prominence of housing & real estate as a major area for creation of both physical  &  financial assets and its contribution in overall National wealth, a need was felt for setting up of a mechanism, which could track the movement of prices in the residential housing segment.  

Regular monitoring of the house prices can be useful inputs for the different interest groups. Accordingly, NHB (National Housing Bank), at the behest of the Ministry of Finance, undertook a pilot study to examine the feasibility of preparing such an index at the National level.

Bangalore, Bhopal, Delhi, Kolkata and Mumbai..! 

Launching of NHB RESIDEX on July, 2007

The pilot study covered five cities viz. Bangalore, Bhopal, Delhi, Kolkata and Mumbai. Besides, a TAG (Technical Advisory Group), with Adviser, Ministry of Finance, as its Chairman and comprising of experts members form RBI (Reserve Bank of India), NSSO (National Sample Survey Organisation), CSO (Central Statistical Organisation), Labour Bureau, NHB and other market players, was constituted to deal with all the issues relating to methodology, collection of data and also to guide the process of construction of an appropriate index .

NHB  RESIDEX..!

Based on the results of the study &  recommendations of the TAG, NHB launched RESIDEX for tracking prices of residential properties in India, in July 2007 by Mr. P. Chidambram (then Hon’ble Finance Minister). Till now it has been updated up to quarter ended March 2012.

 In order to guide and oversee the construction of NHB RESIDEX and extension of its coverage, to include all the 63 cities under JNNURM  (Jawaharlal Nehru National Urban Renewal Mission ); a Standing Committee of technical experts has been constituted under the Chairmanship of CMD, NHB with representations from the Government of India, (Ministry of Finance, NSSO, CSO, Labour Bureau), RBI, and other prominent market players.

P. Chidambaram (Hon’ble Finance Minister) and Ms.  Kumari Shailja

Now, index is being developed only for residential housing sector. However, at a later stage, based on experience of constructing this index for a wider geographical spread, the scope of the index could be expanded to develop separate indices for commercial property & plot of land, which could be combined to arrive at the real estate price index.

 

NHB RESIDEX: Salient Features..!

·         Pilot study covered five cities viz. Delhi, Mumbai, Kolkata, Bangalore & Bhopal representing the various regions of India.

·         Actual transactions prices considered for the study in order to arrive at an Index which will reflect the real estate market trends.

·         Thee year 2001 was taken as the base year for the study to be comparable with the WPI (Wholesale Price Index)  and CPI (Consumer Price Index).  Year to year price movement during the period 2001-2005 has been captured in the study, and subsequently updated for 2  more years i.e. up to 2007.

·         From quarter January to March, 2012, NHB RESIDEX has been further expanded to cover five more cities viz Bhubaneshwar, Guwahati, Ludhiana, Vijayawada and Indore.

·         NHB RESIDEX has been expanded to cover 10 more cities, viz, Ahmedabad, Faridabad, Chennai, Kochi, Hyderabad, Jaipur, Patna, Lucknow, Pune and Surat.

·          Further, with 2007 as base, NHB RESIDEX has been updated up to quarter ended March, 2012 with quarterly update (January to March 2012).

·         At the time of last updation and expansion of coverage of NHB RESIDEX to ten  more cities, the base year has been shifted from 2001 to 2007.

·          NHB RESIDEX is now being up dated on quarterly basis. In the first phase NHB RESIDEX will be expanded to cover 35 cities having million plus population.

·         The proposal is to expand NHB RESIDEX to 63 cities which are covered under the JNNURM  to make it a truly national index.

·         Prices have been studied for various administrative zones / property tax zones constituting each city.

·         The index has been constructed using the weighted average methodology with Price Relative Method (Modified Laspeyre’s approach). 

·         Primary data on housing prices is being collected from real estate agents by commissioning the services of private consultancy / research organisatons of national repute; in addition data on housing prices is also being collected from the housing finance companies &  bank, which is based on housing loans contracted by these institutions.   

At present, NHB RESIDEX has covered 20 cities in the first phase, it is proposed to cover 35 cities having million plus population.

The proposal is to expand NHB RESIDEX to 63 cities, which are covered under JNNURM , to make it a truly national index, in a phased manner. It is envisaged to develop a residential property price index for select cities &  subsequently an all India composite index by suitably combining these city level indices to capture the relative temporal change in the prices of houses at different levels.

  Photo 1: Launching of NHB RESIDEX on July, 2007    

Photo 2 : Mr. P. Chidambaram (Hon’ble Finance Minister) and Ms.  Kumari Shailja ( Hon’ble  Minister, Urban Employment & Poverty Alleviation)

 

                           

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