RBI monitors the HPI for 10 major Indian cities: Mumbai, Delhi, Chennai, Kolkata, Bengaluru, Lucknow, Ahmedabad, Jaipur, Kanpur and Kochi and at the all-India level.
Only four – Bengaluru, Chennai, Lucknow and Delhi – of 10 Indian metro cities witnessed an increase in housing prices in the fourth quarter of 2015-16 over the previous quarter, says an RBI release. What is more, growth rate in the All-India House Price Index (HPI) has slowed significantly in Q4 of 2015-16. Interestingly, HPI for Mumbai did not show an increase over the period.
The Reserve Bank of India (RBI) monitors the HPI for 10 major Indian cities: Mumbai, Delhi, Chennai, Kolkata, Bengaluru, Lucknow, Ahmedabad, Jaipur, Kanpur and Kochi and at the all-India level.
The HPI for All-India (base 2010-11=100) sequentially increased to 223.2 in Quarter 4 2015-16 from 221.7 in the previous one (Q3 of 2015-16) showing a rise of a mere 1.5 per cent. HPI of Bengaluru increased by 5.5 per cent; whereas HPI for Kochi declined by 8.0 per cent over the same period.
The rate of increase (Y-o-Y) of All-India HPI has also slowed since Q1:2015-16. During Q4:2015-16, the rate of growth has sharply fallen to 5.2 per cent from 9.7 per cent in the previous quarter and 17.5 per cent a year ago, says the release. This gives statistical backing to the opinion that rate of appreciation in real estate prices has slowed significantly from the highs of 2011-12 (See graph). This is something those looking at real estate as an investment need to factor in when comparing it with alternative investment avenues.
There may be some areas which still offer opportunities to investors in real estate but these will have to be picked carefully as future movement of prices is always difficult to predict accurately. Comparing on an annual basis, in Q4 of 2015-16 Chennai witnessed maximum increase of 12.1 per cent whereas Jaipur witnessed maximum contraction (-10.3 per cent).