RBIs housing index to track home buying trends

News Posted - 2010-05-01

The Reserve Bank of India (RBI) has initiated an exercise to set up a housing start-up index (HSUI) to track new residential projects in 31 major cities and measure the changes in construction activities.

The HSUI will cover new residential projects in all major cities including Delhi, Mumbai, Chennai, Kolkata and Bangalore, among others, RBI said while inviting quotations from consultancy companies.

RBI said housing start¬ups in a particular quarter would be estimated from the permits issued in that quarter and the various past quarters by using the rates at which the permits got converted into start-ups in the recent past.

“The periodicity of this survey will be once in three years. The agency needs to visit about 350 sites to get the details on house start¬ups in each city,” RBI said in the tender notice.

The housing index will give insights into consumer activity because construction of new houses typically requires large investment.

“It depicts forward trends in the economy. An economy that is growing rapidly has an increased demand for housing and HSUI could be used to forecast demand for new houses,” it said. The index would also act as an indicator of economic growth as more houses would lead to increased demand for input materials such as steel, cement and credit. The data on housing would be collected for eight quarters. This data will be processed through a co-efficient matrix to arrive at the actual data.

It can be noted that the National Housing Bank (NHB) had last year decided to expand an index of residential real estate rates from the five cities it covers at present to 36 cities. The index, called the NHB Residex, which is the country’s first official residential property price index, now covers Bangalore, Bhopal, Delhi, Kolkata and Mumbai.

In the United States, the federal government regularly releases housing starts data. Building permits are also released with the housing starts data. By being aware of the monthly number of permits issued, analysts estimate trends for the upcoming months.

Housing starts and permits are an important indicator of future economic activity. A rise in housing starts can lead to a fall in the bond market and vice versa. A continued slide in housing starts can lead to an economic slowdown and a recession.

Source: Financial chronicle 27/04/10

India 3rd Most Popular Real Estate destination among Emerging Countries

Being heads and shoulders above the other countries, India has emerged as the 3rd most preferred real estate destinations. Real estate in India serves as an engine of the nation’s growth and presently it is one of the most lucrative grounds for investors who want to generate profit. The major boom in the real estate sector has been fueled by the industrial sector growth and liberalization policies of the government.

What has made India, the 3rd most popular real estate destination?

Budding economy: India’s growing emergence as a leader in the global economy is one of the major reasons of India becoming the 3rd most preferable real estate destinations. It has been found that the profit from construction especially IT sectors in India is 18% and 5% of India’s GDP is contributed by the housing sector. There is a demand for commercial real estate and the lease rentals have also been picking up. India has emerged as a fastest growing economy providing the best opportunity for capital appreciation.

Foreign investment: Investment made by the foreign investors in the townships, housing, construction projects etc. has enabled a high growth curve in the real estate sector. More than 18% foreign investors have shown interest in the real estate of India.

Market potential: As the 5th largest economy in the world, India offers high prospects for growth and earning potential. It offers unlimited opportunities for overseas trade.

Initiatives taken by the government: The initiatives taken by the government of India has offered a boost to the real estate sector making it the 3rd most preferred destinations. As a part of initiatives taken by the government, RBI (Reserve Bank of India) has declared concessional schemes for real estate sector. Steps have been taken to reduce the time taken for development of SEZ’s (special economic zones).

India’s real estate sector is extremely promising. An unhindered growth in the real estate sector for the next twenty years is expected. The above stated points clearly provide you with all the reasons that make India the 3rd most popular destinations among other emerging countries.

blogs.realestateindia.com 24/04/10