Residex to benchmark the booming housing market in India

`NHB Residex', the index is expected to fill the void created by an absence of a relevant benchmark in the booming housing market in India.

The indices would be prepared on a quarterly basis to start with, according to an NHB statement. It promises to capture relationship between the residential property prices and the various backward and forward linkages it has in the economy.

It will compile the indices for selected 10 major cities - - Greater Mumbai, Kolkata, Delhi, Chennai, Banagalore, Hyderabad, Ahmedabad, Kanpur, Jaipur and Patna. "These indices would be useful for various stakeholders like individual builders, housing finance industry as well as Government and policy-makers," as per NHB's CMD.

Buyers and builders can benefit by interpreting the indices to get an idea regarding demand and price movements of different types of houses in various cities and localities. Also the housing finance industry can use the indices to assess the likely demand for finance.

Until now, very little information is available to the home buyers and investors through local real estate agents and investment advisors, who have limited resources and may not be considered to be independent or objective in their opinions. With the persistent boom of the housing sector,there was surely a need to monitor the movement of value of the underlying assets (i.e. the real estate) and ensure that there are no undue mark-ups on either side of the economically efficient pricing. In fact, there is a need for reliable, unbiased information about the long-term performance of residential property specifically in terms of its pricing and their movements over time.

As one expert pointed out "it success will depend on how unbiased it can be".

It also promises to help Government and policy makers to assess the movement in the housing stock and its price variations over a period of time on spatial basis as well as by category of construction. These indices can also be used to assess the gap, if any, in the reported and actual market prices of the properties in different localities/regions and State Governments/Local Authorities can make their use while formulating their policies on Property Tax/Registration Fee etc.

NHB will be interacting with various organisations, interested groups and stakeholders in this area while finalising the model for preparing the Real Estate Price Indices. To start with, these indices will be prepared on quarterly basis. Subsequently, based on the experience the coverage and the periodicity may be revised.

Also refer this presentation made by the Chairman of NHB some time back.