The IIMB Magicbricks (MB) Housing Sentiment Index is positive across 9 of the 10 cities surveyed with Hyderabad reflecting positive sentiment after the division of the state and with Bangalore continuing to lead expectations
August 25, 2014: The latest Housing Sentiment Index (IIMB-MB HSI) by IIM Bangalore and Magicbricks forecasts that homebuyers across 9 of the 10 cities surveyed expect real estate prices to rise over the next six months. The aggregate Housing Sentiment Index (HSI) measured across 10 cities rose by 9% over the previous quarter and stood at 118. (An HSI score of 100 suggests prices are expected to remain static). The IIMB-MB buyer sentiment survey includes Ahmedabad, Bangalore, Chennai, Delhi, Gurgaon, Hyderabad, Kolkata, Mumbai, Noida and Pune.
Introducing The IIMB-MB HSI Report, Ms. Jayashree Kurup, Research and Content Head, Magicbricks.com, explained, “In line with the positive market sentiments, real estate buyers are upbeat about residential property. Most of the early seekers are end users, largely with a family income of upto Rs 10 lakh. While end users are actively scouring the market for property, the actual purchase decision may still be about 9 months away, marginally higher than the previous quarter. It is interesting to also note that premium buyers with an annual family income of Rs. 1 crore and above have posted significantly higher sentiment up by 13% over the previous quarter.”
Hyderabad posted an HSI of 118, an increase of 22% as compared to the previous quarter. Sentiment has improved considerably after the division of the state. Specifically, Central Hyderabad witnessed a 54% increase in HSI this quarter.
Bangalore topped the list of cities once again with an HSI of 143, a marginal 2% increase from the previous quarter. Consistent demand from IT and manufacturing sectors, increasing job security coupled with Bangalore being the preferred destination for job seekers has ensured that the city remains at the top of the list.
Ahmedabad was the only city with negative sentiment of 86, a drop of 13% from the previous quarter.
The Seller Sentiment Survey indicates that sellers continue to be bullish about markets with an HSI of 161. Of the sellers, 35% are doing so to book profits while 29% want a bigger accommodation. Of the respondents 60% of sellers are looking to sell apartments/flats.
Key Findings of the Apr-Jun 2014 Report
> The National HSI increased by 9% to 118 this quarter
>Bangalore, with an HSI of 143, continues to lead among the ten cities
>Hyderabad witnessed a 22% increase in HSI after the division of the state
>The Seller Index witnessed a marginal decline to post an HSI of 161
Summarizing the findings, Uma Sitaraman, Lead Researcher, IIMB-Century Real Estate Research Initiative (CRERI) stated, “Most cities witnessed a marginal increase in sentiment and this ‘guarded optimism’ is in line with the new government stepping in at the centre with a clear majority during the quarter. People seem to be waiting to understand the effects of this new government before taking any major decisions. With the stellar performance of the equity markets, real estate is bound to witness healthy demand in the near future due to re-allocation of profits from equities into housing.”
Properties in the Rs 20-40 lakh range continue to be preferred with over 29% buyers in this range. Apartments are the preferred housing type with over 65% choosing to buy apartments.
Details are in the complete IIMB MB HSI report – available for free download on Magicbricks.com: 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 the buyer ‘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-MB HSI Indexation Methodology:
The IIMB-MB 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 home buyers 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 last quarter to compare the buyer and seller sentiments.
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 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. Its rigorous research projects are defined by structured analytical processes and constant engagement with market participants.
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