property index

property prices

According to a report published by RBI, the house prices have gone up by 77 per cent across metros in the country in the last 3 years ending September 2012, even though the economy is not doing very well.

The All-India House Price Index (HPI) of the RBI has gone up from 100 in 2008-09 to 141.7 in 2010-11 and 176.9 in 2011-12, clearly indicates a pattern of strong demand for houses.

The year-on-year rise in house prices in the fourth quarter of 2011-12 was 24.8%, the highest increase in the last nine quarters.

Assuming a customer had invested Rs 1 crore in a house in 2008-09, the present value of same would be around Rs 2.24 cr. in Mumbai, and if he had invested the same amount in Delhi, the same would be around 1.95 cr.

Mumbai has recorded the maximum rise of 124.7% during the period, followed by Delhi which saw a jump of 95.3%. Delhi also led the house price rally in 2011-12 as the HPI in Delhi rose by 44.45% to 195.3%.

Ahmedabad and Lucknow came next, while Chennai saw only 17%, lowest among the metro cities. In the cities like Bengaluru, Ahmedabad and Lucknow, house prices grew at a relativity lesser pace during 2010-11, which picked up in 2011-12. Kolkata, Chennai, Jaipur and Kanpur saw some moderation in 2011-12 compared to 2010-11.

Equity markets have risen by around 13% during the same period, giving a CAGR of around 4%.

Starting with the base as 100 from the fourth quarter of FY 2008-09, the Reserve Bank of India has been compiling quarterly house price indices for nine major cites viz. Delhi, Mumbai, Kolkata, Bengaluru, Chennai, Jaipur, Ahmedabad, Kanpur and Lucknow, as well as their aggregate at the all-India level. The data is collected from the registration authorities of the respective state governments. Overall trends in the house price index are regularly disseminated in the Reserve Bank’s Quarterly Review of Macroeconomic and Monetary Developments.

However RBI further added that HPI based on registration prices has some limitations. Since in most of the cities, the registration amount on papers at times is mention lower than that of actual market price, may not give the actual figure. Also, the differences in the time gaps between the actual transaction and registration do not always follow the same pattern across different states, and thus may not give the accurate figure in a given period.