Keeping in view the prominence of housing and real estate as a major area for creation of both physical and financial assets and its contribution in overall National wealth, a need was felt for setting up of a mechanism, which could track the movement of prices in the residential housing segment. Regular monitoring of the house prices can be useful inputs for the different interest groups. Accordingly, National Housing Bank, at the behest of the Ministry of Finance, undertook a pilot study to examine the feasibility of preparing such an index at the National level. The pilot study covered 5 cities viz. Bangalore, Bhopal, Delhi, Kolkata and Mumbai. Besides, a Technical Advisory Group (TAG), with Adviser, Ministry of Finance, as its Chairman and comprising of experts members form RBI, NSSO, CSO, Labour Bureau, NHB and other market players, was constituted to deal with all the issues relating to methodology, collection of data and also to guide the process of construction of an appropriate index . Based on the results of the study and recommendations of the TAG, NHB launched RESIDEX for tracking prices of residential properties in India, in July 2007 by Shri P. Chidambram (then Hon’ble Finance Minister). Till now it has been updated up to quarter ended March, 2014.
In order to guide and oversee the construction of NHB RESIDEX and extension of its coverage, to include all the 63 cities under Jawaharlal Nehru National Urban Renewal Mission (JNNURM); a Standing Committee of technical experts has been constituted under the Chairmanship of CMD, NHB with representations from the Government of India, (Ministry of Finance, NSSO, CSO, Labour Bureau), RBI, and other prominent market players.
At present, index is being developed only for residential housing sector. However, at a later stage, based on experience of constructing this index for a wider geographical spread, the scope of the index could be expanded to develop separate indices for commercial property and land, which could be combined to arrive at the real estate price index.
NHB RESIDEX: Salient Features
- Pilot study covered 5 cities viz. Delhi, Mumbai, Kolkata, Bangalore and Bhopal representing the various regions of the country.
- Actual transactions prices considered for the study in order to arrive at an Index which will reflect the market trends.
- 2001 was taken as the base year for the study to be comparable with the WPI and CPI. Year to year price movement during the period 2001-2005 has been captured in the study, and subsequently updated for two more years i.e. up to 2007.
- Thereafter, NHB RESIDEX was expanded to cover ten more cities, viz, Ahmedabad, Faridabad, Chennai, Kochi, Hyderabad, Jaipur, Patna, Lucknow, Pune and Surat.
- At the time of last updation and expansion of coverage of NHB RESIDEX to 10 more cities, the base year has been shifted from 2001 to 2007.
- From quarter January-March, 2012, NHB RESIDEX has been further expanded to cover 5 more cities viz Bhubneshwar, Guwahati, Ludhiana, Vijayawada & Indore.
- The Index for Delhi has been expanded to cover Gurgaon, Noida, Greater Noida and Ghaziabad thereby expanding its coverage to National Capital Region (NCR). Thus, from April-June, 2012 onwards the Index of Delhi would cover National Capital Region (NCR).
- Further, NHB RESIDEX has been expanded to include six (6) new cities namely Chandigarh, Coimbatore, Dehradun, Meerut, Nagpur and Raipur from the quarter January-March, 2013 thereby taking the total of number of cities covered to 26.
- With 2007 as base, NHB RESIDEX has been updated up to quarter ended March 2014 with quarterly update (Jan-March, 2014) using CERSAI data.
- With 2007 as base, NHB RESIDEX has been updated up to quarter ended September, 2013 with quarterly update (July-September, 2013).
- The proposal is to expand NHB RESIDEX to 63 cities which are covered under the Jawahar Lal Nehru National Urban Renewal Mission to make it a truly national index.
- Prices have been studied for various administrative zones/property tax zones constituting each city.
- The index has been constructed using the weighted average methodology with Price Relative Method (Modified Laspeyre’s approach).
- Primary data on housing prices is being collected from real estate agents by commissioning the services of private consultancy/research organisatons of national repute; in addition data on housing prices is also being collected from the housing finance companies and bank, which is based on housing loans contracted by these institutions.
The proposal is to expand NHB RESIDEX to 63 cities, which are covered under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), to make it a truly national index, in a phased manner. It is envisaged to develop a residential property price index for select cities and subsequently an all India composite index by suitably combining these city level indices to capture the relative temporal change in the prices of houses at different levels.