Find the best real estate return in India – Residex

In this article I will share with you charts that cover city-wise housing price performance for India.  You can see which cities and also areas in different cities which have had the best real estate return in India over the last 5 years.

For a long time we have been hampered with lack of data and absence of a credible unbiased central body. There are real estate sector reports by the likes of Knight Frank and Jones Lang LaSalle. But they are parties which may have a conflict of interest because they are also in the business of real-estate broking.

The National Housing Bank (NHB) which is owned by the Reserve Bank of India (RBI) launched the Residex which is a housing price index in 2007. It started with a few cities and is gradually expanding to cover Tier-I and Tier-II cities in India.

NHB kept the base year as 2007 and started the index at a value of 100.

Residential real estate returns as per Residex data, 2007-2012

Real estate return India as per ResidexSource: Residex – NHB

The usual suspect for the highest residential real estate returns, Mumbai, is only 5th as per the Residex data. Chennai has had the best house price appreciation. Assuming 2007 as 100, Chennai housing price index moved up to 304, implying a tripling of residential real estate prices in the last 5 years.

The NHB also provides city specific indices. For example in Mumbai they have broken down the city into various zones and there are separate indices for each of them. For example, Zone 1 is Cuffe Parade, Malabar Hill and Zone 6 is Bhandup, Mulund. They also cover areas around Mumbai like Thane, Navi Mumbai and Virar. In the chart below, 2007 is the base year and the index starts at 100.

Residential Real estate returns in Mumbai as per ResidexSource: Residex – NHB

Benefits of Residex

  • For a  home buyer or seller – As I mentioned earlier the arrival of Residex means that now there is greater transparency in prices and price trends.
  • For the economy – RBI has a data source for asset price monitoring
    • In plain English, when prices start moving up like a rocket and don’t seem like they are coming back, its not in the best interest of the economy.
    • Think of the housing bubble in the US and the damage it did. Alan Greenspan, then Fed Chairman did not do much even when warning signs were flashing.
    • Using Residex as one of the data sources, RBI can take proactively take necessary steps to cool prices down.

Useful links

Follow this link and you will see Residex city level data. In that page, follow individual city links to see intra-city data.

Residex data on NHB website

Take some time out and you can read through this paper put out by the RBI in 2008.

RBI paper on Asset Price Monitoring

 

Incidentally, I am on the search for long-term real estate price data (think more than 20 years). If any reader has any information please share it at kunal@caporbit.com. Thanks!

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