RBI Households’ Inflation Expectations Survey, All India House Price Index

The average rate of property in India’s 10 leading housing markets showed an increase of 2.7% during the January-March period of 2021, show data available with the Reserve Bank of India (RBI).

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According to the RBI’s All India House Price Index (HPI), average property rates in these cities increased 2.7% year-on-year in the fourth quarter (Q4) of 2020-21 (FY 2021) when compared to a 3.9% growth a year ago, a time before the first wave of the Coronavirus pandemic hit India, forcing it to announce one of the severest lockdowns in the world that battered the economy by adversely impacting businesses.

On a quarter-on-quarter basis, however, all-India HPI growth rate moderated to 0.2% in Q4.

The Reserve Bank of India’s quarterly HPI for January-March 2021 is based on transaction-level data received from registration authorities in 10 major cities. The 10 cities covered in the analysis were Ahmedabad, Bengaluru, Chennai, Delhi, Jaipur, Kanpur, Kochi, Kolkata, Lucknow and Mumbai.

Also, large variations in price growth were witnessed across these housing markets. While average property rates increased by 15.7% in Bengaluru, property values in the Pink City Jaipur shrunk 3.6% y-o-y.

Barring Delhi, Bengaluru, Kolkata and Jaipur, where average property values showed a decline, all the other cities covered in the HPI recorded a positive quarter-on-quarter growth.

Price growth in major housing markets during previous quarters in FY 2021

According to a report by CARE Ratings, housing prices showed an increase of only 1.4% in the first three quarters of FY 2021 after growing at a compounded annual growth rate of 5.6% in the specified period of five years. However, reverse migration caused by the COVID-19 pandemic pushed up property values in tier-2 cities, which witnessed relatively higher increases in prices. Cities like Ahmedabad, Lucknow, Kanpur and Kochi saw average values increasing by over 8% during the three quarters, the rating agency said.

Household prices likely to rise, say Indians: RBI survey

According to the RB’s Households’ Inflation Expectations Survey, those who expected housing prices to increase, fell to 48.6% in May 2020, as compared to 70.9% a year ago

June 15, 2020: The Reserve Bank of India (RBI) released the Households’ Inflation Expectations Survey that studied people’s opinion on inflation between March and May 2020. According to the survey, 85.3% of the respondents felt that household prices would increase in the future, while those who expected housing prices to increase, fell to 48.6% in May 2020, as compared to 70.9% a year ago. The survey covered 18 cities, including Ahmedabad, Bengaluru, Bhopal, Bhubaneshwar, Chennai, Delhi, Guwahati, Hyderabad, Jaipur, Kolkata, Lucknow, Mumbai, Nagpur, Patna, Thiruvananthapuram, Chandigarh, Ranchi and Raipur.

Households expect inflation to increase

As compared to May 2019, more households have said that prices will increase. In May 2020, 85.3% said that prices will increase, as compared to 78.3% last year. An estimated 12.4% said that there will be no price increase. About 56% also felt that prices will increase more than the current rate.

Property prices unlikely to increase

The real estate sector is reeling under the weight of slow sales and inventory overhang. Consumer sentiments reveal that most prospective buyers are looking for price cuts. However, with the cost of raw materials going up, a sizable discount looks almost out of the question. Amidst the COVID-19 pandemic, only 48.6% of the respondents said that the cost of housing will increase, as against 70.9% in May 2019. The Coronavirus disease may have led 30.3% of the respondents to say that they do not anticipate changes in property prices, while 21.1% said that they expected a decline in real estate values.

Household expectation about cost of services

Cost of services may increase, estimates show. About 68.3% of respondents said that they expected service charges to go up and 43.2% said that it might increase at a rate higher than the existing rate. About 27.4% said that there has been no change in cost of services. Only 4.4% felt that there has been a decline in prices.

Household expectation about food, non-food products

An estimated 84.6% of households surveyed said that they expect prices of food products to increase and 58.6% said prices will increase more than the current rate. Only 10.7% said there will be no price change. As for non-food products, 76.7% said that prices will increase while 49.5% said that it will be at a rate higher than the existing rate.

Cost of household durables too will increase, said 55.1% of the respondents, and according to 33.6%, it will be higher than the existing rate. About 29.7% said there was no change in prices.

Expectation about prices, one year ahead

Category	March 2020 (Percentage of total responses)	May 2020 (Percentage of total responses)
General prices
Increase	89.2	85.6
Decrease	1.8	2.5
Food products
Increase	85.6	77.3
Decrease	4.1	6.9
Non-food products
Increase	82.3	73.3
Decrease	3.4	6.0
Household durables
Increase	70.8	59.6
Decrease	9.5	12.1
Cost of housing
Increase	79.9	59.7
Decrease	5.5	15.2
Cost of services
Increase	81.4	74.4
Decrease	2.7	3.5

Source: RBI

The RBI says, “Expecting increasing price pressure on food products, more households expect general prices and inflation to rise over the three months, as compared to the previous round. However, the prices of all product groups, especially cost of housing, are expected to ease over the year ahead.”

(With inputs from Sneha Sharon Mammen)

FAQs

What is RBI’s Household Inflation Survey used for?

The survey is conducted at bi-monthly intervals by the Reserve Bank of India and is taken as households’ sentiments on inflation. It provides directional information on near-term inflationary pressures as expected by the respondents and may reflect their own consumption patterns.

What is the RBI’s House Price Index?

The RBI’s house price index (HPI), which is released on a quarterly basis, is based on transaction-level data from property registration authorities in the 10 cities of Mumbai, Delhi, Kolkata, Chennai, Bengaluru, Ahmedabad, Jaipur, Kanpur, Kochi and Lucknow.

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Sunita Mishra

An alumna of the Indian Institute of Mass Communication, Dhenkanal, Sunita Mishra brings over 16 years of expertise to the fields of legal matters, financial insights, and property market trends. Recognised for her ability to elucidate complex topics, her articles serve as a go-to resource for home buyers navigating intricate subjects. Through her extensive career, she has been associated with esteemed organisations like the Financial Express, Hindustan Times, Network18, All India Radio, and Business Standard.

In addition to her professional accomplishments, Sunita holds an MA degree in Sanskrit, with a specialisation in Indian Philosophy, from Delhi University. Outside of her work schedule, she likes to unwind by practising Yoga, and pursues her passion for travel.
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