Global academic leaders, Indian Institute of Management Bangalore (IIMB) and India’s No.1 property portal,Magicbricks.com (MB) collaborate and release the first robust “IIMB-MB Housing Sentiment Index” (HSI) for the real estate sector in India.
October 23, 2013: The IIMB MB HSI is a sentiment index of the Indian real estate market that captures buyer ‘mood’ and serves as a leading indicator of residential real estate market performance. The first inaugural report has now been released by comparing survey results in the month of September 2013 against Index scores captured earlier in July 2013.
According to the report, in line with the current economic scenario, buyers across cities are bullish enough to slow down real estate purchases, but are actively scouting for property. However, they are not in a hurry to make their purchase and expect the prices to drop by upto 10%. Buyers are willing to wait for 3months to a year to conclude property purchases.
Launching the inaugural issue, Sudhir Pai, Business Head of Magicbricks said, “Magicbricks has been publishing its popular market performance report, PropIndex, for the last 2 years. While PropIndex reports on real estate market performance of the previous quarter, we had sensed the need to capture “buyer sentiment” which could in turn offer insights into potential future market performance. We are delighted to partner with such a credible research-driven institute as IIMB in bringing out India’s first Housing Sentiment Index”.
The HSI currently covers the 8 cities of Mumbai, Delhi, Hyderabad, Pune, Noida, Gurgaon, Bangalore & Chennai.An HSI of 100 suggests that buyers expect prices to remain at current levels, while values lower than 100 suggest that buyers expect prices to fall and higher than 100 that they expect them to rise.
Key Findings of the 1st Report
> In line with the overall economic sentiment, the National HSI dropped to 93 from 117 in the previous quarter, a decline of over 20 per cent.
>Buyers in Bangalore expect prices to increase marginally with an HIS of 106, while buyers in the other 7 major cities expect them to fall with HSI scores below 100.
>The percentage of buyers who expect prices to fall by more than 10% has almost doubled from 14% of our sample last quarter to 25% this quarter.
> Mumbai has the lowest HSIscore of 81, which shows that they’re pessimistic about future price increases.
>Buyer sentiment dropped the steepest at 34% in Hyderabad, not surprising given the uncertainty around the Telengana issue.
Summarizing the findings, Prof. Venkatesh Panchapagesan, Head of IIMB-CRERI, IIM Bangalore stated,“Home buyers’ sentiment continue to remain weak across major cities as many expect house prices to further decrease this quarter. While price expectations were universally down this quarter when compared with last quarter, the drop was most severe in Hyderabad and least severe in Bangalore. Buyers seem to prefer a “wait and watch” strategy that could force developers’ hands to cut prices more aggressively to reduce inventory during the festive season.”
Buyers now are willing to wait, with almost a third of the respondents willing to wait more than a year before buying a property. At the micro level it appears that the rising inflation rates and high borrowing costs are making homebuyers reassess their big-ticket purchase decisions. Coupled with the macros of sluggish economic growth and the looming political election’s uncertainties, buyers are at present extremely cautious.
The Inaugural Issue is available complimentary for download here – www.magicbricks.com/iimb-hsi
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.
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.
Magicbricks.com is India’s No 1 Property portal. With monthly traffic exceeding 6 Million visits and with an active base of over 5Lac 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 1-stop shop for property buyers and sellers; and with this in mind, we have innovated on launching several product features, content and research services and in building of the largest audience pool. We are part of the Times of India Group, India’s biggest Media Conglomerate.