{"id":5350,"date":"2017-07-17T18:08:44","date_gmt":"2017-07-17T12:38:44","guid":{"rendered":"https:\/\/teekhapan.wordpress.com\/?p=5350"},"modified":"2017-07-17T18:08:44","modified_gmt":"2017-07-17T12:38:44","slug":"the-real-returns-from-real-estate-have-been-very-low","status":"publish","type":"post","link":"https:\/\/vivekkaul.com\/2017\/07\/17\/the-real-returns-from-real-estate-have-been-very-low\/","title":{"rendered":"The Real Returns from Real Estate Have Been Very Low"},"content":{"rendered":"
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The best way to challenge myths is to look at data. The trouble is that\u00a0India’s real estate sector<\/a>\u00a0is very opaque and does not give us enough data points to do a proper job of analysing it. In the process, the myth that any real estate investment yields massive amounts of returns at all points of time, continues to persist.<\/p>\n Thankfully, now we have some data which we can use. Sometime back, the National Housing Bank (NHB), the regulator of housing finance companies, launched a\u00a0revamped RESIDEX<\/a>, a housing price index. The index claims to offer home prices of 50 cities across the nation though I could find data for only 49. In this column, I look at data referred to as HPI@Assessment Prices based on the information furnished by banks and other lending agencies regarding home prices.<\/p>\n This should help us get some idea about which way the real estate prices have gone over the last few years. And for the first time we should be able to calculate the actual city wise returns. This should give all the real estate\u00a0bhakts<\/em>\u00a0out there some idea of how their investments have done over the years.<\/p>\n As I said at the beginning, the NHB RESIDEX has price data for 50 cities. Let’s take a look at Table 1. It shows the per year returns of these cities between June 2013 and March 2017. It also shows the one-year return between March 2016 and March 2017. While the NHB RESIDEX claims to have data from 50 cities, I could find data only for 49 cities.<\/p>\n Also, even though it has data from 50 cities, it can’t claim to be a pan India index given that many of the cities represented separately are essentially the satellite cities of some of the bigger cities like Mumbai, Delhi and Kolkata. Further, some of the bigger cities in states haven’t found representation in the index. These include Jamshedpur in Jharkhand, Madurai in Tamil Nadu, Jalandhar in Punjab, Allahabad and Varanasi in Uttar Pradesh.<\/p>\n Nevertheless, the index is a good start which can give us a good sense which way the real estate market in India is headed. Also, it will give us a good idea of how well or badly has the real estate market in India performed, over the last few years. Typically, this sort of information is rarely available in the public domain and will allow us to settle once and for all, how good an investment real estate has been over the last few years.<\/p>\n Table 1:\u00a0<\/strong><\/p>\n