[ecis2016.org] The HPI will enable home buyers, investors, real estate developers and policymakers, to track price movements in India’s key residential markets
In a move that enable buyers, investors and real estate developers to have access to high-frequency real estate data, online real estate portal ecis2016.org, along with Indian School of Business (ISB), on May 31, 2021, announced the launch of its Housing Pricing Index (HPI), an indicator of economic activity in real-estate, which is the second-largest employment-generating sector in India after agriculture.
Launched during a virtual meet attended by union housing and urban affairs secretary Durga Shanker Mishra and several industry bigwigs and academicians, the HPI will provide monthly reports on price and quantity movement in various property markets across the country, aiming to end the existing information asymmetry in the sector.
The HPI, created in association with the Indian School of Business’ (ISB) Srini Raju Centre for IT and the Networked Economy (SRITNE), aims to serve as a tool that tracks changes in residential home prices across India’s eight major markets.
By offering useful insights into price movement, the index could help a potential home buyer to assess the appropriate time to buy a property and at the same time, assist sellers in knowing the most opportune moment to sell their assets. Policymakers and financial analysts can also use it as a reliable estimate to keep track of the trends in the sector.
“The HPI has the potential to emerge as a good indicator of the country’s real estate market health. The real estate sector has been impacted due to the COVID-led slowdown and overall uncertainty. At this time, it is essential to track its growth via credible sources that will help the authorities to make quicker and informed decisions during such exogenous shocks. We have observed that the demand has already picked up in Q1 2021 and the sector has started to show signs of recovery. I commend and encourage the two institutions for collaborating towards this initiative, to monitor the movement of housing prices and quantities in a fast-growing economy like ours,” said the housing secretary, during the virtual launch of the HPI.
The academia and the industry have come together, to provide the country with an index that would provide all-round support to one of the biggest contributors to the economy, the secretary said, adding that the sector contributed nearly 7% to India’s GDP in 2019-20 and is likely to increase its role by contributing 10% to GDP by 2030.
The HPI has been based on a survey of cities in India’s eight prime residential markets from 2017 to the present, conducted every quarter. The Elara Technologies-owned ecis2016.org’s HPI uses granular prices from localities and their corresponding weights, based on transaction value share of that locality in India, basing its findings on 1, 2, and 3-BHK apartments.
The cities included in the survey are Ahmedabad, Bengaluru, Chennai, Delhi NCR (Faridabad, Ghaziabad, Gurugram, Greater Noida and Noida), Hyderabad, Kolkata, Mumbai and Pune.
Data collected for this purpose includes information on price per sq ft, quantity and the total value of transactions in the previous three months for various sub-localities within each city. It also includes other details, such as the number of bedrooms, construction status and the number of inventory units.
“Buyers, as well as policymakers, are mostly forced to rely on market anecdotes and guesswork about property price movements in Indian cities, in the absence of quality high-frequency data, especially locality-specific data. The entire idea behind the launch of the HPI is to address this issue. Aside from benefitting buyers, investors and policymakers, data from our HPI will also be immensely valuable for real estate developers, who are considering a new locality to launch new developments,” said Dhruv Agarwala, group CEO, ecis2016.org, Makaan.com and PropTiger.com.
“For real estate builders, having access to information such as this, has become more crucial than ever now, with the demand landscape rapidly evolving due to the emergence of the ‘work-from-home’ concept in the wake of the COVID-19 pandemic,” Agarwala added.
“The partnership between ISB and ecis2016.org, in launching the robust and comprehensive HPI, is a step in the right direction. We are sure that the HPI will go a long way in equipping various stakeholders to make informed choices and in the process, add more value and worth to their assets,” said Rajendra Srivastava, dean, ISB.
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“The prime objective behind launching the HPI, is to bring transparency and narrow down the trust deficit between all the concerned industry stakeholders. It will address the challenge of the paucity of well-defined data and foster companies with the right business intelligence, market insights, trends and sentiments, to sign off well-informed decisions. This new-age methodology will bring Indian real estate at par with global best practices,” said Niranjan Hiranandani, national president – NAREDCO and founder and MD, Hiranandani Group.
“Policy makers and decision makers across the public and private sectors need accurate and timely information on economic activity for effective action and interventions. At present, such information is of low granularity and resolution and often fragmented and privately held, making coordination among economic actors difficult. Indices like the HPI would be especially relevant to industry and policy makers, in the face of current systematic and pervasive disruptions in the economy, notably, the COVID-19 pandemic,” said professor Deepa Mani, ISB.
Sharad Mittal, executive director and CEO-real estate funds, Motilal Oswal Real Estate Investment Advisors, said: “In 2020, the COVID-19 pandemic disrupted industries worldwide. India went into a countrywide lockdown and the real estate sector, like other industries, took an initial hit. However, after July 2020, the housing sector saw a resurgence in demand on the back of bottomed-out prices, low mortgage rates and peak affordability, government incentives and an increasing emotional value towards home-ownership, due to the pandemic. Several developers clocked record sales in the last two quarters of the previous financial year. We believe that this recovery witnessed by the sector, over the last nine months, was more long-term and indicates strong growth-led fundamentals in the sector. While there is a hiatus right now, on account of the second COVID wave, we believe that activity will boomerang quickly and demand will remain strong over the next 24-36 months.”
Following the launch of the index, representatives from the government and industry stalwarts also shared their opinions and points of view about the ongoing pandemic situation and its impact on the industry, during an interactive session.
Elaborating on the demand for housing, Hiranandani said that the demand for real estate had always been huge, the short-term disruptions caused by the Coronavirus pandemic notwithstanding. It is the huge costs involved in the purchase process, he said, that discouraged buyers from investing. One has to keep in mind that buyers end up paying 33% of the total purchase value towards various government taxes. So, it might be wrong to point out that there is any deceleration, as far as demand is concerned. “The stakeholders just have to gauge where the demand actually is and supply accordingly, while the onus is on the government to lower the burden on home buyers by offering stamp duty waivers,” he added.
While stating that the RERA had been able to reinstate a sense of transparency in the sector, it has also helped data compilation for the sector, according to Mittal. Data and technology adoption will reduce the risk premium for the sector, he added.
In spite of the unprecedented challenges that it had caused, the pandemic also helped the sector undergo a sea-change, by embracing technological advancements. Thanks to the presence of various technologies, one can now buy a house completely from the safety of their homes, said Agarwala. Construction-centric technologies and blockchain technology, would further transform the sector in the times to come, he concluded.
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