RBI House Price Index Grows By 13.7% in Q2; Delhi Registers Highest Growth

When India's real estate markets were in a stagnant phase, many developers and experts said the prices were not going to fall any further. They seem to be right.

In the July-September quarter of the current financial year, the Reserve Bank of India's (RBI) House Price Index (HPI) grew by 13.73 per cent year-on-year. The findings of the quarterly report, which was released on December 18, also showed that the prices did not fall in any of the 10 cities surveyed by the central bank, except in Kochi, Kerala, where it fell by 7.2 per cent, year-on-year.

The RBI uses year 2010-11 as the base year for the index, with the base as 100 points. The central bank compiles the data which they receive from registration authorities of various state governments. The bank then takes into account all the houses that are transacted in a certain quarter in a city, and not all the existing houses in a city. The list of the 10 cities include Mumbai, Delhi, Chennai, Kolkata, Bengaluru, Lucknow, Ahmedabad, Jaipur, Kanpur and Kochi.

The growth in the RBI's HPI was largely because of the rise in housing prices in national capital Delhi, Ahmedabad (Gujarat) and Tamil Nadu capital Chennai.
However, the rise in HPI was lower than in previous quarters. The HPI rose 14.5 per cent in the first quarter of FY15-16, and 17.5 per cent in the fourth quarter FY14-15. West Bengal capital Kolkata, Rajasthan capital Jaipur and Uttar Pradesh capital Lucknow were among the cities that contributed to the slower growth of the index. The housing prices, which were steeply rising in the initial years in which the RBI collected the data, have been moderately growing since 2013-14.

The All-India base of the Hour Price Index rose from 215.3 points in the first quarter of FY15-16 to 219.5 in the second quarter. In the second quarter of FY14-15, the RBI's House Price Index was at 193 points.

At 21.9 per cent year-on-year, Delhi registered the highest price rise, followed by Bengaluru (19.2 per cent) and Chennai (12.38 per cent). In Lucknow, prices rose 10.89 per cent, in Mumbai 10.75 per cent, in Kanpur 8.44 per cent, in Ahmedabad by 7.4 per cent, in Kolkata by 7.07 per cent, and in Jaipur by 3.26 per cent. The greatest quarter-on-quarter rise in housing prices, however, was registered in Kanpur, at 5.51 per cent. The steepest quarter-on-quarter decline was registered in Kolkata, at 3.13 per cent.

The trend

• Sector experts forecast that housing prices may rise further in 2016 and a substantial segment of the unsold inventory is likely to be absorbed in the coming year.

• The reason why sales have been picking up in the recent past is that interest rates on home loan have fallen, while developers are increasingly catering to home buyers in the affordable and mid-income group segments.

• Even though the Real Estate Bill will not be passed in the Winter Session of Parliament, housing demand may rise when the Bill gets a final approval.

• Real estate developers are keen to finish their existing projects than to launch the new ones due to uncertainty in the policy environment.