Indian Real Estate Markets Display Cautious Optimism: IIMB MB HSI Report

DELHI, October 31, 2014 /PRNewswire/ --

- Sentiments in Ahmedabad Have hit New Highs While Bangalore Takes a Break From the Steadily Rising Sentiments to Drop for the First Time in a Year  

- The IIMB Magicbricks Housing Sentiment Index (HSI) for the 2^nd Quarter of 2014-15 Reveals That Home Buyers Continue to Expect Prices to Rise Across the Country. But the Bullish Sentiments Seem to be Waning from the Peak Seen Soon After the Elections Last Quarter 

The Housing Sentiment Index (IIMB MB HSI) assessed by IIM Bangalore and Magicbricks forecasts that homebuyers across 10 cities surveyed expect real estate prices to rise over the next six months. The aggregate Housing Sentiment Index (HSI) measured across 10 cities dropped marginally by 4 per cent this quarter to 114. (An HSI score of 100 suggests the prices would remain static). The IIMB Magicbricks buyer sentiment survey includes the cities of Ahmedabad, Bangalore, Chennai, Delhi, Gurgaon, Hyderabad, Kolkata, Mumbai, Noida and Pune.

"The Indian real estate consumer is still in the wait and watch mode. While there is active interest in the market, evinced by the time spent by consumers on Magicbricks searching for houses, the consumer still expects prices to hold for at least six months and is willing to wait to buy," explains Sudhir Pai, Business Head, Magicbricks.

HSI Snapshot City-wise 

    
    City              HSI
    Ahmedabad         112 Up
    Bangalore         124 Down
    Chennai           123 Down
    Delhi             113 Down
    Gurgaon           107 Down
    Hyderabad         104 Down
    Kolkata           126 Down
    Mumbai            105 Down
    Noida             119 Down
    Pune              131 Up

Although sentiments in 8 out of the 10 cities dropped quarter-on-quarter, the general optimism prevails with all 10 cities posting positive sentiments.

Sentiments in Ahmedabad soared by 30 per cent and can be attributed to the progressive policies and intelligent governance that led to mushrooming of various industries. The fact that the current reform-focused Prime Minister, Narendra Modi, hails from Ahmedabad has assisted in the heightened positive atmosphere in the city.

Bangalore, for the first time in a year, registered a drop in sentiments. HSI for Bangalore dropped by 13 per cent to 124. Although respondents are still positive, the soaring cost of housing and shortage of affordable housing is taking its toll on sentiments.

Pune was the only other city, other than Ahmedabad, to register higher sentiments this quarter. HSI rose by 5 per cent to 131, making Pune the highest sentiment scorer. Infrastructure developments across the city led to Pune becoming an attractive residential market.

Hyderabad posted an HSI of 104, a drop of 12 per cent as compared to the previous quarter. Sentiments have been very volatile after the division of the state.

The Seller Survey indicates that sellers continue to be bullish about markets with an HSI of 159. Of the sellers, 36 per cent are doing so to book profits while 27 per cent want a bigger accommodation. Of the respondents, 50 per cent sellers are looking to sell apartments/flats.

Key Take Aways of the Jul-Sep 2014 Report 

- The National HSI decreased by 4% to 114 this quarter

- All 10 cities posted positive sentiments

- The Seller Index witnessed a marginal decline to post an HSI of 159

- Of the respondents 83 per cent earn less than Rs 20 lakh per annum

- Almost 50 per cent are looking for property below Rs 40 lakh

- Nearly 53 per cent currently live in rented accommodation

- Of the respondents 44 per cent look to buy property within the next 6 months

- Over 41 per cent time their property purchase based on market conditions

- Almost 67 per cent prefer to purchase flats/multi-storey apartments

Summarising the findings, Uma Sitaraman, lead researcher, IIMB-Century Real Estate Research Initiative (CRERI), stated, "Although all cities posted positive sentiments, consumers expect prices to remain stable or rise marginally. With the economy expected to perform better, effective policies in the housing sector will ensure that positive sentiments translate into actual purchase. There is an urgent need to focus on affordable housing across the country."

The complete IIMB Magicbricks HSI report is available for free download: www.magicbricks.com/iimb-hsi/

About the IIMB Magicbricks HSI: 

The IIMB Magicbricks HSI is a sentiment index of the Indian real estate market that aims to capture the buyer's 'mood' and serve as an 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 Magicbricks HSI Indexation Methodology:  

The IIMB Magicbricks HSI is based on the "Diffusion Index" methodology, widely used to capture market sentiments globally. HSI is calculated by taking the difference of the total positive and negative sentiments after adjusting 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 do not 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 of prospective homebuyers after careful screening by Magicbricks 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 last quarter to compare the buyer and seller sentiments.

About IIMB-CRERI: 

IIM Bangalore-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 organisations to collect data and develop research projects 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. 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 9 million visits and with an active base of over 7 lakh property listings, Magicbricks provides the biggest platform for buyers and sellers of property to connect with each other in a clear and transparent manner. The vision is to be a one-stop shop for property buyers and sellers. With this in mind, Magicbricks has innovated several product features, content and research services, which helped it to build the largest audience pool. Magicbricks.com is part of The Times of India Group, India's biggest media conglomerate.

Media Contact: Aseem Seth, [email protected], +91-9910273367, +91-120-6636338, Head of Corporate Communications, Times Business Solutions Limited