The IIMB MB Housing Sentiment Index turns positive across all 10 cities surveyed
Noida races to the top, Hyderabad shakes off Telangana woes, Mumbai remains weak
February 24, 2014: “Indian real estate is bound to remain an attractive sector in the medium term with faster growth expected in Tier II cities. Competitively priced urban pockets such as Noida, where robust supply is backed with a promise of even better infrastructure have received a thumbs up from end users. However, active interest will take another 6-9 months to translate into buying activity as consumers expect prices to go up only after six months, post the 2014 elections,” says Sudhir Pai, Business Head, Magicbricks.
The Housing Sentiment Index (IIMB MB HSI) assessed by IIM Bangalore and Magicbricks clearly underwrites this forecast as homebuyers across the nation expect real estate prices to rise over the next 6 months. The aggregate Housing Sentiment Index (HSI) measured over the holiday season, has bounced back to 117 (the level at which it was in Q1) from 93 in the previous quarter.This reflects a shift from the previous quarter when buyers expected a decrease in prices. (An HSI score of 100 suggests the prices would remain static.)
This quarter, the IIMB MB HSI buyer survey extends to two more cities, Ahmedabad and Kolkata, apart from covering Mumbai, Delhi, Hyderabad, Pune, Noida, Gurgaon, Bangalore and Chennai.
Noida topped the list of cities with an HSI of 129 witnessing a 33% jump in HSI Q/Q. The proposed metro link, emphasis on affordable housing projects and construction of software technology parks is making Noida a fast growing and attractive city to live in.
The sentiments were muted by Mumbai, which ended last this quarter too with an HSI of 85. As the financial capital wrestles with a state of high supply with negligent demand, it is predicted that it will take 9 quarters to clear this inventory at current rates.
The Latest IIMB MB HSI Report also introduces the Seller survey to compare sentiments between sellers and buyers. The HSI of 156 for sellers was a lot higher than the buyer HSI. 29% of sellers expected a 5%-10% increase in property prices. 38% want to book profits while 30% want to move to a bigger accommodation.
Key Findings of the Q3 2013 Report
> The National HSI bounced back to 117 from 93 in the previous quarter.
> Noida, with an HSI score of 129, posted an increase of 33% compared to the previous quarter.
> In spite of the Telengana issue, Hyderabad HSI increased by 22% to 101 this quarter,breaking a largely negative streak to end close to neutral
> This quarter too, Mumbai posted lowest HSI score of 85, followed by Delhi with an HSI of 96, the only two cities with HSI lower than 100.
> Not surprisingly, the seller index that was introduced this quarter is highly optimistic with an HSI of 156.
Summarizing the findings, Prof. VenkateshPanchapagesan, Head of IIMB-CRERI, IIM Bangalore stated, “Although sentiment this quarter has increased, buyers continue to be cautious with average waiting time increasing to over 9 months. Bangalore continues to be steadily upbeat over the last 3 quarters and is the first choice for those relocating from other cities. Buyers “wait and watch’ approach is most likely to continue in the first half of 2014.”
Properties in the Rs. 20-40 Lakh range are most preferred with over 30% of buyers in this range. Given the high construction costs, steady inflation, increasing bank loan rates and the looming elections, buyers are likely to use extreme caution before investing in property in the coming months.
The complete IIMB MB HSI report is available for free download here – http://www.magicbricks.com/iimb-hsi/
About the IIMB MB HSI –
The IIMB MB HSI is a sentiment index of the Indian real estate market that aims to capture buyer ‘mood’ and serve as a leading indicator of residential real estate market performance. The first inaugural report was released in the month of October 2013 and captured sentiments across eight cities. The latest report covers 10 cities and includes a comparative Seller’s Survey as well.
IIMB MB HSI Indexation Methodology –
The IIMB MB HSI index is based on the “Diffusion Index” methodology that is widely used to capture market sentiments globally. HSI is calculated by taking the difference of total positive and negative sentiments after adjusting for the magnitude of neutral responses and other biases inherent in survey based work. The value of HSI can range from 0 to 200. A score of 100 represents neutrality, meaning people don’t expect house prices to either increase or decrease. A score of 200 indicates that all respondents expect house prices to increase. A score of 0 indicates that all respondents expect house prices to decrease.
This index is based on an online survey ofprospective homebuyers after careful screening by MB and IIMB. The survey questionnaire has been designed to accurately capture buyer sentiment on house prices, the degree to which he/she thinks house prices will move, micro market preferences within each city and basic demographic information including buyer preferences for type of property and financing methods. A seller survey was introduced this quarter to compare buyer and seller sentiments.
About IIMB-CRERI:
IIMBangalore- Century Real Estate Research Initiative (IIMB-CRERI) is a dedicated research initiative to pursue scientific research on Indian real estate industry. It partners with industry/government organizations to collect data and develop research projects that are aimed to improve understanding of this vital sector of the economy. The initiative complements work at IIMB’s other leading Centres such as the Centre for Public Policy. As a leading international management school in India, IIMB has strong linkages to the corporate sector, CSOs and the government, and its rigorous research projects are defined by structured analytical processes and constant engagement with market participants.
About Magicbricks.com:
Magicbricks.com is India’s No.1 property portal. With monthly traffic exceeding 6 million visits and with an active base of over 5 lakh property listings, Magicbricks provides the biggest platform for buyers and sellers of property to connect with each other in a clear, transparent manner. Our vision is to be a one-stop shop for property buyers and sellers. With this in mind, we have innovated several product features, content and research services, which have helped us to build the largest audience pool. We are part of The Times of India Group, India’s biggest media conglomerate.