Indian real estate markets cautiously optimistic: IIMB MB HSI Report

The IIMB Magicbricks Housing Sentiment Index (HSI) reveals that home buyers continue to expect prices to rise   across the country. The bullish sentiments seem to be waning from the peak seen soon after the elections last             quarter.  Sentiments in Ahmedabad have hit new highs while Bengaluru takes a break from the steadily rising                                                                    sentiments to drop for the first time in a year

October 31, 2014: The latest 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, Bengaluru, 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

Although sentiments in 8 out of the 10 cities dropped Q/Q, 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.

Bengaluru, for the first time in a year, registered a drop in sentiments. HSI for Bengaluru 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: http://www.magicbricks.com/iimb-hsi/