Housing start-up index to indicate construction volume every quarter
The Financial Express, March 27, 2009, Page 5
Kakoly Chatterjee, New Delhi
While Residex, an index planned to benchmark the housing sector, would serve as an indicator of property prices, the housing start-up index (HSUI) planned by the Reserve Bank of India aims to indicate the volume of construction taking place in a particular location. The RBI expects to start publishing the data by March 2010. Once operational, the data is expected to be published every quarter.
HSUI is also meant to serve as a lead indicator of economy's growth as more houses would propel demand for input materials like cement and steel, labour requirements and credit demand. The demand for consumer durables would also increase apparently.
The index would cover metro cities and some tier I cities initially. It would then eventually cover the rest of the country.
Also, it is a barometer of housing demand in future. It would help probe factors responsible for increasing property prices. Industry experts believe that with the help of HSUI, property bubble could be detected in its early stages and be controlled subsequently.
“Data collection will start from the last eight quarters while the ground survey of the number of conversions taking place would be conducted every three to five years. This data will be processed through a co-efficient matrix that will make clear how many conversions are actually happening. This will of course vary in larger cities and small towns,” said RBI Technical Advisory Group chairman Amitabh Kundu.
According to the group, an advisory committee on HSUI at NBO may be set up to guide and oversee the entire process of compilation of housing permit data from concerned local bodies and the Directorate of Economics and Statistics of the state governments. The number of housing-starts (a case where the construction begins) during a period would indicate the demand and supply situation in the housing market, as reflected in conversion(a case where housing permits translate into real construction).
“Real estate is largely an unorganised market and a dearth of data makes any analysis or extrapolation really difficult. This data will help both the players and the consumers,” Shailesh Kanani, real estate analyst with Angel Broking said. This index would be useful for developers as it would help know areas of oversupply. They can hence refrain from construction activity in those areas. In case of an oversupply in a particular location, consumers before investing would wait till prices fall, he added.
HSUI would help bridge the demand and supply gap in a particular location as realty players would be aware of the demand in a location.
House that!
•The RBI expects to start publishing the data by March 2010. Once operational, the data is expected to be published every quarter
• HSUI is meant to serve as a lead indicator of economy's growth as more houses would propel demand for input materials like cement and steel, labour requirements and credit demand
• The index would cover metro cities and some tier I cities initially. It would eventually cover the rest of the country and also serve as a barometer of housing demand in the future
• An advisory committee on HSUI at NBO may be set up to guide and oversee the entire process of compilation of housing permit data from the concerned local bodies and the Directorate of Economics and Statistics of state governments
The Financial Express, March 27, 2009, Page 5
Kakoly Chatterjee, New Delhi
While Residex, an index planned to benchmark the housing sector, would serve as an indicator of property prices, the housing start-up index (HSUI) planned by the Reserve Bank of India aims to indicate the volume of construction taking place in a particular location. The RBI expects to start publishing the data by March 2010. Once operational, the data is expected to be published every quarter.
HSUI is also meant to serve as a lead indicator of economy's growth as more houses would propel demand for input materials like cement and steel, labour requirements and credit demand. The demand for consumer durables would also increase apparently.
The index would cover metro cities and some tier I cities initially. It would then eventually cover the rest of the country.
Also, it is a barometer of housing demand in future. It would help probe factors responsible for increasing property prices. Industry experts believe that with the help of HSUI, property bubble could be detected in its early stages and be controlled subsequently.
“Data collection will start from the last eight quarters while the ground survey of the number of conversions taking place would be conducted every three to five years. This data will be processed through a co-efficient matrix that will make clear how many conversions are actually happening. This will of course vary in larger cities and small towns,” said RBI Technical Advisory Group chairman Amitabh Kundu.
According to the group, an advisory committee on HSUI at NBO may be set up to guide and oversee the entire process of compilation of housing permit data from concerned local bodies and the Directorate of Economics and Statistics of the state governments. The number of housing-starts (a case where the construction begins) during a period would indicate the demand and supply situation in the housing market, as reflected in conversion(a case where housing permits translate into real construction).
“Real estate is largely an unorganised market and a dearth of data makes any analysis or extrapolation really difficult. This data will help both the players and the consumers,” Shailesh Kanani, real estate analyst with Angel Broking said. This index would be useful for developers as it would help know areas of oversupply. They can hence refrain from construction activity in those areas. In case of an oversupply in a particular location, consumers before investing would wait till prices fall, he added.
HSUI would help bridge the demand and supply gap in a particular location as realty players would be aware of the demand in a location.
House that!
•The RBI expects to start publishing the data by March 2010. Once operational, the data is expected to be published every quarter
• HSUI is meant to serve as a lead indicator of economy's growth as more houses would propel demand for input materials like cement and steel, labour requirements and credit demand
• The index would cover metro cities and some tier I cities initially. It would eventually cover the rest of the country and also serve as a barometer of housing demand in the future
• An advisory committee on HSUI at NBO may be set up to guide and oversee the entire process of compilation of housing permit data from the concerned local bodies and the Directorate of Economics and Statistics of state governments
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