Those seeking to buy homes might soon have the benefit of tracking property price

RELATED ARTICLES Homes most affordable in 30 years: HDFC

trends th-rough a single comprehensive housing index formulated jointly by the National Housing Bank and the Reserve Bank of India.

The National Housing Bank (NHB) says there is a strong case for both the regulators to come up with a single index.

“There is a strong case for adopting a common approach with RBI. We have to see to what extend we can arrive at a common perspective,” R V Verma, executive director of NHB, told Financial Chronicle.

While NHB, which regulates housing finance companies, has been compiling a residential index called Residex for more than three years, RBI last week initiated preparatory work to formulate its own housing index.

An index helps prospective buyers to assess the true value of a property at a particular location and check the offer made by the seller against the ind-

ex price.

Verma said working towards a common index to track property prices across the country with RBI would not be difficult since NHB is also taking part in the deliberations on the RBI index.

“We are part of the RBI committee that is taking a view on the new index. Therefore, it will be easy for us to work towards a single index. We have to analyse the areas of overlap and study the relative methodology to come up with a common approach,” he said.

RBI said the new housing start-up index (HSUI) would track price movements of new residential projects in 31 major cities and measure changes in construction activity.

The NHB Residex, which started tracking trends in Bangalore, Bhopal, Delhi, Kolkata and Mumbai in 2007, has expanded its coverage to Ahmedabad, Faridabad, Chennai, Kochi, Hyderabad, Jaipur, Patna, Lucknow, Pune and Surat. NHB is also working to update Residex more than twice in a calendar year.

NHB is also planning to expand the coverage to 35 cities with a population of more than a million in the near term. In the long term, Residex is expected to track trends in 63 cities covered under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM).

R R Nair, chief executive officer and director of LIC Housing Finance, said indices tracking residential prices are useful for homebuyers.

“Housing indices help the customer more than the housing finance companies since they give the buyer a clear indication of prevalent property rates. The quotations from the seller can be matched with the index while taking the decision,” Nair told FC.

Nair said such indices would also help the government and the regulator to decide the kind of intervention needed during adverse trends in prices.

“A housing index will also help the government and the regulator to see whether an asset bubble is building and decide on the kind of controls needed to halt such price movements,” he said.

Omaxe group chairman Rohtash Goel said the property market would welcome the common index. He said a comprehensive index of residential price movements across cities would be useful for both developers and property buyers.

“An index would give both the buyer and the seller a clear idea on prices. While a buyer would have an indication of how much they should pay for a unit, a seller would also be able to price the property properly,” Goel said.

(With inputs from Ranjit Bhushan)