Housing Price Indices in India

48 Pages Posted: 13 Feb 2015

See all articles by Charan Singh

Charan Singh

Indian Institute of Management (IIMB), Bangalore

Date Written: February 13, 2015

Abstract

The housing activity in the country, high already, is expected to further accelerate in the next few years, mainly because the government has already announced that it is committed to provide a house for all by 2022. The increased activity will impact the housing markets as a change in the house price affects the households’ perceived lifetime wealth and hence influences the spending and borrowing decisions of households. Further, house price gains increase housing collateral and hence housing credits. The potential two-way link between bank lending and house prices give rise to mutually reinforcing cycles in credit and real estate markets. The increasing dominance of the sector necessitated setting up of a mechanism which could track the movement of prices in the residential housing segment. Therefore, it becomes necessary to prepare an accurate measure of aggregate house price, despite limited availability of data, in order to understand the behavior of housing markets and their influence on the economy. To understand about house prices, it is important to understand about housing indices. In India, NHB and RBI construct and release an index each, RESIDEX and HPI, respectively. In case of both the indices there are a number of problems.

Keywords: Housing Indices, housing prices, RESIDEX. HPI, Housing, Real Estate, monetary policy. 1

Suggested Citation

Singh, Charan, Housing Price Indices in India (February 13, 2015). IIM Bangalore Research Paper No. 477. Available at SSRN: https://ssrn.com/abstract=2564428 or http://dx.doi.org/10.2139/ssrn.2564428

Charan Singh (Contact Author)

Indian Institute of Management (IIMB), Bangalore ( email )

Bannerghatta Road
Bangalore, Karnataka 560076
India
080-26993818 (Phone)

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