“The real estate sector – one of the significant contributors to India’s gross domestic product (GDP) and source of employment, remains largely unorganized and fragmented. A few reasons being paper-based land records, and organic transaction practices carried out through person-driven or word-of-mouth approaches”
India’s residential real estate sector is still evolving, with buying and selling still taking place more through the internal resources of the stakeholders, which involves a word-of-mouth approach. Also, the sector is highly disorganised, as land records are primarily paper-based and ill-maintained, which often lead to ownership and litigation issues
Moreover, the economic slowdown in recent years coupled with steep capital values, delayed projects and the liquidity crisis induced by the Non-Banking Financial Company (NBFC) debacle have lowered the consumer and investor confidence in the residential real estate market
This is apparent from the investment scenario in the real estate asset classes which include the warehousing, residential, commercial, and mixed-use development segments. The real estate sector has received close to USD 36 billion of investments between 2015 and 2020. However, while the share of the commercial segment increased to 62 percent in 2020 from 25 percent in 2015, the share of residential segment reduced to a mere 2 percent in 2020 compared to 61 percent in 2015
Government policies such as RERA have been taken up to regulate the unorganised Indian real estate sector
The need for a housing price index
Despite the key role the real estate sector plays in the economy, there are very few aggregate indices to monitor real-time changes in the housing market. To overcome this problem, “Srini Raju Centre for IT and the Networked Economy (SRITNE)” and “Housing.com” have come together to build the “Housing Price Index (HPI)” for India. It is an index of economic activity in the real estate sector using big data analytics at the highest spatial and temporal resolution. The HPI would enable policymakers, banks, finance companies, real estate developers, investors, and retail homebuyers to track housing prices at an aggregate level, as well as across different cities in India. Our vision is to establish the HPI as a transparent and trustworthy source to monitor the inflation/deflation in housing prices and quantities in India
The way forward
The COVID-19 pandemic has changed the industry dynamics in a way never imagined before. The emerging structure of “work-from-home” is expected to play a crucial role in the demand for residential housing. Prolonged confinement and the rise of remote working have re-established the importance of owning a home. This, coupled with growing urbanisation, and affordable housing options, may encourage people to view real estate as a viable investment option once again
Our indices show that the industry has witnessed a slowdown in the last few years, but, the change we have been waiting for may be just around the corner. The implementation of RERA across all states has bolstered the confidence among homebuyers by increasing transparency. The gains from the digitisation of land records and other reforms would accrue and slowly show their impact on the overall housing market. In this backdrop, the HPI project would play a crucial role and provide reliable and most updated information on housing trends in India
http://www.naredco.in/notification/pdfs/housing_price_index_hpi_indian_real_estate_market_through_the_lens_of_hpi_MB0zUBZ.pdf
