NHB RESIDEX Status, Challenges and Way Forward

1. Presentation on NHB RESIDEX Status, Challenges and Way Forward NEW DELHI APRIL 20, 2012

2. NHB RESIDEX • NHB RESIDEX is an Initiative of the National Housing Bank to provide an Index of Residential Prices in India across cities and over time. • NHB launched First RESIDEX in July 2007, covering data upto 2005 with 2001 as the base year. Subsequently RESIDEX was updated to cover two more years i.e. up to Dec. 2007 with 2001 as base year. • The pilot study covered 5 cities viz. Bangalore, Bhopal, Delhi, Kolkata and Mumbai. Subsequently NHB RESIDEX was expanded to ten (10) more cities viz., Ahmedabad, Faridabad, Chennai, Kochi, Hyderabad, Jaipur, Patna, Lucknow, Pune and Surat. • NHB RESIDEX now covers 15 cities and has been updated upto quarter ended December, 2011 (October – December). NHB RESIDEX is now being updated on a quarterly basis with 2007 as the base year. • All the cities covered under RESIDEX are JnNURM Cities.

3. Scope and Coverage of the Index • At present, NHB RESIDEX covers residential properties. • NHB RESIDEX is a step in the direction of building up a large and reliable database of housing prices and related information on housing and housing finance. • The Initiative, as it evolves will seek to bring greater transparency in the property market.

4. Need for NHB RESIDEX • NHB RESIDEX tracks the movement in prices of residential properties over a period of time by size and location of dwelling units (location wise, zone wise and city wise) which are relevant indicators for lenders, borrowers and for policy formulations at the local and State level. • The complex nature of markets for real estate is one of the major challenges towards construction of a representative price index for residential properties in India. • With heterogeneous attributes in terms of qualitative and quantitative aspects like locality, covered area, community facilities, individual layouts, infrastructure, local demand and supply etc., captured in the RESIDEX, provides a widely representative Index.

5. Uses of NHB RESIDEX • The index will aid the home buyers in their purchase decisions by enabling comparison between cities, their localities and comparison of a price rise in a particular city and localities, over time. • One of the major considerations in housing finance is the proper assessment of the value of property which is being financed. NHB RESIDEX can be a useful indicator to estimate the value of property to be financed and also assess the adequacy of the security cover on the outstanding loan.

6. Uses of NHB RESIDEX • Potential home buyers can identify the emerging housing markets from the movements of the RESIDEX at the city level. • Builders and developers may also benefit from the index by assessing the demand scenario in a locality, and mapping the housing needs in different parts of the country. • RESIDEX may be useful to policy makers, HFIs, builders, developers, investors and individuals. And is being shared with the stakeholders like Banks, HFCs, Ministry of Finance & RBI on regular basis

7. Data -Size • The data size with which Index is constructed is improving with every quarter. • The latest Index for the quarter October- December, 2011 was constructed with approximately 40,000 transactions provided by 14 HFCs and 6 Banks namely State Bank of India, Bank of India, Bank of Baroda, Punjab National Bank, Syndicate Bank and Dena Bank. • 18 Public Sector Banks have appointed the Nodal officers as one-point contact for this exercise and will be working towards the submission of data on a timely basis.

8. Current Initiatives • NHB RESIDEX is being expanded in terms of the number of cities covered from the existing 15 to 20 cities. From January-March, 2012 NHB RESIDEX will be constructed and released for 5 new cities namely Ludhiana, Vijayawada, Indore, Guwahati and Bhubaneshwar. The city of Delhi will now include transactions from Gurgaon, Noida and Greater Noida. • The time lag in which index is released has been reduced to less than One & half months with the latest index being updated in 39 days • NHB RESIDEX is being well-received from all the corners of the industry e.g. banks, HFCs, Builders & Developers and Government (Economic Survey).

9. CITYWISE INDEX

10. Price Movement for the quarter October-December 2011 • Rising Trend: Residential housing prices in 9 cities have shown rise in prices in this quarter ended December, 2011 over the previous quarter ended September, 2011. Maximum increase was observed in Surat (9.4%) followed by Chennai (9.2%), Pune (8.9%), Delhi (8.4%), Bengaluru (7.5%), Lucknow (7.1%), Faridabad (5.8%), Ahmedabad (2.5%) and Bhopal (1.4%). • Declining Trend: 6 cities have shown decline in prices over the previous quarter with maximum decline observed in Kochi (-15.5%) followed by Hyderabad (-6.0%), Jaipur (-1.5%), Patna (-0.7%), Kolkata (-0.5%) and Mumbai (-0.5%).

11. Way Forward • To involve maximum number of HFIs and increasing the volume of transaction data to make the Index truly representative, broad based and robust. • From the FY 2012-13 (July – June) it is further proposed to expand the coverage of the index by including 5 more cities out of the JNNURM cities to make the Index more representative. • It is further, proposed to conduct a study on analysis of the trends in the quarterly index from 2007 (base year) onwards once the Index for the five new cities gets stabilized. The proposed study will envisage exploring the Change in the methodology of constructing the Index and Change in the Zoning in different cities while constructing the Index.

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