1. Scope and Coverage of the Index

NHB RESIDEX tracks the housing prices in the select 15 cities. The latest Residex is for the quarter July-September 2011. The Residex has been constructed for 15 cities and has taken into account the price trends for residential properties in different locations and zones in each city as per classification devised for the purpose. The classification has been designed so as to give the most representative Index for each city based on the transactions in the market and data collected from various sources. The data are put through a Model that depicts the actual behaviour of the market and throws up the Index. This initiative seeks to provide a better understanding of the trends in the Residential property market and its various nuances. The trends also seek to bring greater transparency in the property market. As the Residex evolves, it is expected to bring greater uniformity and standardisation in the valuation of properties across the industry.

2. Uses of NHB RESIDEX 

The Index also helps the general consumers and property buyers and borrowers in their decision-making by enabling comparisons over time and across cities and localities and the emerging trends. This information has a critical bearing on the credit evaluation by the lenders and assessment of the value (present and potential) of the security against the loan. NHB RESIDEX can be a useful indicator for estimating the value of property to be financed and also for assessing the value of security cover on the outstanding loan. Builders and developers may also benefit from the index by assessing the demand scenario in a locality, and mapping the housing needs in different parts of the country. NHB RESIDEX may be useful to policy makers, banks, housing finance companies, builders, developers, investors and individuals.

3. Price Movement for the quarter July-September 2011 

The movement in prices of residential properties has shown decreasing trend in nine cities covered under NHB RESIDEX during the quarter July-September, 2011 in comparison to the previous quarter. However, on year-on-year basis, except 2 cities, price movements in all the cities have witnessed increase.

Rising Trend: Residential housing prices in 6 cities have shown rise in prices in this quarter ended September, 2011 (July-September, 2011) over the previous quarter ended June, 2011 (April-June, 2011). The city which has shown the maximum increase is Pune (13%) followed by Chennai (9%), Mumbai (7%), Delhi (5%), Jaipur (2%) and Bengaluru (1%).

Declining Trend: There are 9 cities which have shown decline in prices over the previous quarter with maximum fall shown by Kochi (-9%) followed by Hyderabad (-8%), Bhopal (-7%), Surat (-7%), Faridabad (-6%), Ahmedabad (-4%), Lucknow (-4%), Patna (-3%) and Kolkata (-2%).

CITY WISE HOUSING PRICE INDEX

CITY WISE HOUSING PRICE INDEX (UPDATED UPTO QUARTER JULY- SEPTEMBER 2011)

A Round Table on “ Housing Finance: the Emerging Contours” was convened at New Delhi on 7th October 2011 by National Housing Bank (NHB) in collaboration  with Centre for Advanced Financial Research and Learning (CAFRAL), promoted by RBI. The Conference was chaired by Mrs. Usha Thorat, Director CAFRAL and included participation from Central Government, World Bank, DFID, International Finance Corporation (IFC), Banks, Housing Finance Companies, Micro Finance Institutions, Real Estate Associations, Research Institutions and Builders & Developers and Rating Agencies. The deliberations were held on a number of issues relating to institutions, products, regulations and policies to deal with better access to housing and housing finance with focus on retail housing market. The Conference also deliberated on a number of policy and market issues and Regulation.

The Conclave took into account the recent developments in the housing sector and the role of various agencies and stakeholders in the emerging environment.  The issues relating to affordable housing and low income housing came in for special discussions for identifying the impediments and for exploring solutions.  The role of the Government and public agencies in speedy approvals of housing projects was considered as an important and necessary measure for ensuring efficiency in construction and pricing. While the informal sector population in the urban areas is increasing, the need to develop skills among the lending agencies to appraise such borrowers would be increasingly important.  Fiscal benefits for the lenders as well as construction agencies catering to the low income market would help in scaling up the supply of housing and loans for this segment.  The development of suitable market infrastructure viz. credit bureaus, mortgage guarantee trust fund would also support lending to this segment. 

Other issues that were discussed in the Round Table included the customer-related problems and the need for observing transparency and satisfactory customer service and grievance resolution mechanism on the part of the lenders. The Group also observed that the recent Government initiative of setting up the CERSAI will help prevent frauds and incidence of multiple financing.   The need for developing long-term home loan products on fixed rate basis was also deliberated at length as an option and choice to the borrowers.  While recognising that the there is adequate credit flow to this sector, it was highlighted that the low income borrowers in the formal and informal market are still not being reached.  The reasons for low penetration in this market segment were discussed, which include the high risk perception of the lenders, absence of satisfactory land titling and security for the loans, lack of credit enhancement products viz. mortgage insurance/guarantee, identification of demand etc, and absence of risk-hedging products such as Interest Rate Swaps.

The deliberations also included ways and means to promote efficiency and stability in the market along with expansion.  Low income housing as a means for financial inclusion was also emphasised at the Round Table.  A viable and sustainable business model for construction and supply of low income housing was discussed at length and the practitioners' views were presented. The recommendations included single window clearance for affordable housing, incentives to builders and financial institutions to promote affordable housing, adequate housing infrastructure, designing of housing finance products for people in informal sector, builder ratings, etc.  The need for real estate regulation to bring about greater transparency and credibility in the industry and as a measure to protect consumer interests was emphasised in the meeting.

There were also deliberations on suitable suggested modifications to existing government Schemes like Interest Subsidy for Housing the Urban Poor (ISHUP), Affordable Housing in Partnership, decentralized decision making with local community led involvement and the role of government in providing infrastructure.

The Inaugural Session concluded with the panel recognizing the following issues in the real estate viz. housing sector:

• The Builders proposed that the provision of providing Bank Guarantee of 5% project Cost required to be submitted by them before starting the sale of the houses should be removed.
• The Housing Finance Companies (HFCs) should be allowed to raise funds through external commercial borrowings.
• Housing should be made part of infrastructure industry to enable housing finance institutions to raise long term funds.
• Incentives should be provided for low cost housing projects.
• Environmentally sustainable housing should be promoted.
• Mortgage Insurance is required to boost housing finance in Tier II and Tier III cities.
• Approvals for Housing projects should be quickened.
• Construction industry for housing should convert from building on the site to offsite manufacturing and assembling on the site.

The Session on “Evolution of the housing sector in policy framework relating to the sector - Key challenges in the next decade” concluded with the panel recognizing the following challenges in the housing sector:

• Banking sector can induce greater discipline among builders to help the consumers get better product and services.
• Financing Institutions should impose the discipline on the builders to ensure conformity with the building design and approved plan.
• One of the main reasons for builders delaying completion of housing projects was delay in getting all the approvals from government authorities. 
• Currently, there was no system for checking the quality of houses provided by the builders, such as building materials, technology etc.
• Discipline among builders is possible only by regulation and grading of builders.
• Two important industries namely home inspection industry, who certify the quality of house, and the mortgage insurance industry that protect the lenders from default are important institutional mechanisms that can make a huge difference to the market. These two industries will enable consumer getting quality houses and affordable finance.

In the session on “Housing Finance – Institutions, Markets and Products – Gaps and Opportunities” the panel made the following observations:

• Mortgage guarantee products should be designed in a manner to support affordable housing,
• Possibility of banks/HFCs making prepayment charges flexible based on their actual loss or gain on this account.
• Risk management practices and hedging products could be used by lending institutions to take care of inherent mismatches in lending for housing.

In the session on “Affordable Housing – Way Ahead” the panel observed the following:

• Improving the ISHUP Scheme to make it acceptable for both the bankers and beneficiaries.
• To create an enabling environment for the housing sector.
• Administration of subsidy directly to beneficiaries being a costly affair and leading to leakages, subsidy amount could be used to create adequate housing related infrastructure around affordable housing projects or to lower the refinance rates. 
• For affordable housing, affordable price of land was very important; high price of land was a hindrance in promoting affordable housing.
• In the US market, developers of affordable housing projects get tax incentives and similar tax relief in India would help in promoting affordable housing. 

The proceedings of the Round Table were summarized with the following takeaway points:

1. Huge amount of work was to be done in terms of reforms in law related to rent control, Urban Land Ceiling, property rights, real estate regulation bill etc.
2. One of the important requirements was a Real Estate Regulator to address consumer grievance and regulate the real estate market.
3. To promote affordable housing, incentives were required both to developers and housing finance institutions.
4. Tax issues of developers needed to be addressed to make housing affordable.
5. Supporting infrastructure like credit bureau, rating of developers, collection and dissemination of housing data etc needs to be developed.
6. Affordability was linked to connectivity between residential area and work place. Hence, affordable housing projects should have good connectivity.
7. Housing activity was indicator of economic development activity and strong policy initiatives were required for the sector.
8. Risk and frauds in housing sector should be addressed through appropriate regulations.
9. Customer should have choice on type of interest rates. Risk management practices, refinance and derivative products should be used to offer fair deals to customers.
10. Mortgage guarantee products could free up capital and enable growth with stability.
11. There is huge opportunity in the affordable housing segment and this need to be tapped.
12. The role of government should be to create enabling policy environment and provide adequate infrastructure.
13. Decision making on housing sector should be decentralized and local community should be involved.
14. ISHUP scheme should be suitably modified for better success.

The United Nations has designated the first Monday of October every year as World Habitat Day.  This year, World Habitat Day is being celebrated on 3 October 2011 and the theme for this year’s World Habitat Day is Cities and Climate Change.

As a part of the World Habitat celebrations, the National Housing Bank (NHB) jointly with India Habitat Centre, organized the “Habitainment Quiz 2011” on September 28, 2011 for the institutional and individual members of the India Habitat Centre. More than 100 teams from various institutions participated in the contest. The event was inaugurated by Shri R V Verma, Chairman and Managing Director, NHB and Shri Raj Liberhan, Director, IHC and hosted by Rajiv Makhni. The theme of the Quiz also reflected the theme of the World habitat day viz. Cities and Climate Change.

Housing Finance Companies have certain obligations under the Prevention of Money Laundering Act, 2002 (PMLA) including reporting of large cash and suspicious transactions to FIU-IND as Cash Transaction Report (CTR) and Suspicious Transaction Report (STR).

To sensitize the registered Housing Finance Companies about the importance and development in the area of PMLA and to review their compliance of Know your customer Guidelines/Anti Money laundering norms,  National Housing Bank organized interface session for the Principal Officers of Registered Housing Finance Companies based in Northern, North East and in Eastern region in their Head office on September, 28, 2011.  

Shri  R.V. Verma, CMD, NHB in his inaugural remarks explained the rationale behind KYC/PMLA in the backdrop of the global concern regarding money Laundering and financing of terrorism.

Shri Rajendra Singh, Addl. Director, FIU-IND and Shri Pankaj Rajbanshi, Deputy Director, FIU-IND addressed the participants about the requirement under PMLA. They also expressed  concern in the area of money laundering and legal obligations of reporting suspicious transactions of HFCs  and also  Stressed the need for every HFC to have a structured mechanism in place for monitoring, filtering and reporting of suspicious transactions.

The National Housing Bank convened a review meeting of the ISHUP and the 1% Interest Subvention Scheme on July 21, 2011 at New Delhi. The objective of the meeting was to review the progress under both the Schemes and also obtain feedback from the implementing institutions on various aspects of the Schemes. The meeting was chaired by Chairman and Managing Director, National Housing Bank. Besides, JS(H), MHUPA, Director (IF), MoF, CMD, HUDCO and other senior officials of NHB and HUDCO presided over the deliberations.

The participants in the review meeting included select State Nodal Agencies/SLBC Convenors, State Government and State Government agencies, Banks and Housing Finance Institutions.

National Housing Bank (NHB), the apex housing finance institution, announced its annual results for the financial year ended 30th June 2010. The Bank posted Net Profit of Rs. 280 crores and Gross Loans and Advances of Rs.19,837 crores. 100% collection efficiency was maintained during the year, with ‘Nil’ Gross NPAs and Net NPAs. The Bank made a total loan disbursement of Rs. 8,160 crores, out of which rural housing share was 43%, amounting to Rs.3,696 crores. Disbursements during the year resulted in additional 1.83 lakh units. Average loan size was Rs.4.45 lakhs.

NHB has played a key role in developing the institutional framework for housing finance system in the country. The strategic intent of NHB is directed towards development of low and moderate income housing market and secondary mortgage market. This will be built upon the strength and depth of the primary mortgage market. The Bank’s strategic intervention will include financial, promotional and institution-building initiatives and measures.

To cater to the needs of Senior Citizens, NHB conceptualized and has introduced the Reverse Mortgage Loan. During the year, NHB further improved upon the facilities, by introducing Annuity-enabled product to the Reverse Mortgage Loan Scheme. The new product has banking and insurance elements in it.

NHB’s residential property price index, titled NHB RESIDEX, designed to capture the price movements in residential properties in a comprehensive manner, has been extended from 5 cities to 15 cities, and from half-yearly to quarterly updation.

NHB also launched ‘NHB Housing Info India’ as a portal for information on housing and housing finance in India for its users. It will be further scaled up to act as a complete repository of information.

NHB will focus on inclusive housing and housing finance for low and moderate income households in urban and rural areas of the country. NHB has also forayed into Housing Microfinance market and has sanctioned financial assistance to 23 MFIs amounting to Rs. 83 crores, across a number of States, in all regions of the country.

Dr. D. Subbarao, Governor, Reserve Bank of India handing over Rajbhasha Prize to Shri R.V. Verma, CMD, National Housing Bank in the presence of Shri K.C. Chakrabarty, Deputy Governor, Reserve Bank of India at Reserve Bank of India Rajbhasha Prize Distribution Function.

RV Verma, CMD National Housing Bank addressed the meet on ‘Customer Insights on Low Income Housing’, organized by the National Housing Bank and Monitor India. Also seen in the picture are Ashish Karamchandani, Monitor India; VK Badami, NHB and Michael Markal, World Bank.

1. Scope and Coverage of the Index

NHB RESIDEX is covering only the residential properties. NHB RESIDEX is a step in the direction of building up a large and reliable database of housing prices and related information on housing and housing finance. The Initiative, as it evolves will seek to bring greater transparency in the property market.

2. Uses of NHB RESIDEX 

The index will also aid the home buyers in their purchase decisions by enabling comparison between cities, between the localities in the same city and comparison of a price rise in a particular city and localities, over time. One of the major considerations in housing finance is the proper assessment of the value of property which is being financed. This information has a critical bearing on the credit evaluation and assessment of the quality of the security against the loan. NHB RESIDEX can be a useful indicator to estimate the value of property to be financed and also assess the adequacy of security cover on the outstanding loan. Observers can also identify the potential markets from the movements of the NHB RESIDEX at the city level. Builders and developers may also benefit from the index by assessing the demand scenario in a locality, and mapping the housing needs in different parts of the country. NHB RESIDEX may be useful to policy makers, banks, housing finance companies, builders, developers, investors and individuals.

3. NHB RESIDEX 

The movement in prices of residential properties has shown an upward trend in the 15 cities covered under NHB RESIDEX in October – December, 2010. Residential housing prices in 13 cities have shown an increasing trend in this quarter ended December, 2010 (Oct-Dec, 2010) over the previous quarter ended September, 2010 (July-Sept, 2010). They are Bengaluru (36%), Ahmedabad (16%), Kolkata (11%), Jaipur (10%), Delhi (8%), Bhopal (4%), Mumbai (4%), Faridabad (3%), Kochi (3%), Lucknow (3%), Surat (3%), Chennai (2%) and Pune (1%). Bengaluru (36%) has shown the maximum increase followed by Ahmedabad (16%) and Kolkata (11%) respectively. There are 2 cities which have shown correction in prices over the previous quarter and they are Hyderabad (-1%) and Patna (-1%). Prices have nearly been the same in 3 cities showing +/- 1% change in prices and they are Pune (1%), Hyderabad (-1%) and  Patna  (-1%).
In Bangalore, the city has recorded a growth for a number of reasons:

1. The city is driven by the IT and ITeS markets which have shown robust growth.
2. Other sectors such as manufacturing and BFSI have also grown in the city.
3. The city’s real estate has grown to accommodate affordable or relatively affordable properties across the city and these have shown robust growth.
4. New airport and peripheral economic development hubs have resulted in large tracts of land for real estate development.

In Ahmedabad, residential market is witnessing significant growth by the expanding job market and growing interest in this investment friendly city from both national as well as international players. The growth rate of localities is higher because of availability of easy transportation, nearby market and good quality of construction with all essential facilities.

CITY WISE HOUSING PRICE INDEX

(P) – Indices for the quarter July - September, 2010 have been revised based on actual transaction price data. The revised indices are given in the next column.

Shri R.V. Verma, CMD NHB welcomes Hon’ble Minister of Housing, Republic of Indonesia, H.E. Suharso Monoarfa and delegates at National Housing Bank headquarters, New Delhi on 25 April 2011.

The SKOCH award for Financial Inclusion 2011 was conferred on National Housing Bank for rural housing. The two dedicated Schemes of NHB viz. Golden Jubilee Rural Housing Finance Scheme, a market based Scheme and Rural Housing Fund, a subsidy based Scheme for the weaker sections have expanded the scope of rural housing credit in the country and have resulted in improved institutional depth in providing housing credit delivery in rural areas.

The National Housing Bank (NHB) executed an Agreement with KfW, Germany (the development Bank of Germany) to promote energy efficient housing in India. The Agreement was signed between the two agencies at New Delhi on December 31, 2010 under which NHB will borrow an amount of EURO 50 million comprising EURO 12 million under concessional IDA window and balance EURO 38 million under the normal window.

The National Housing Bank (NHB) in association with HelpAge India today, launched the first Reverse Mortgage Loan (RML) Counseling Centre in Ahmedabad. This is the 8th RML Counseling Centre established by NHB in association with HelpAge India and other industry partners.

NHB had conceptualized and introduced the Reverse Mortgage Loan (RML) for supplementing the financial requirements of the Senior Citizens in the country. The Reverse Mortgage Loan enabled Annuity (RMLeA) Scheme provides for periodic payments to Senior Citizens for their entire life. As per information made available to NHB, a total of 7436 accounts amounting to 1507 crores have been sanctioned under the RML Scheme and a total of 60 accounts worth 22 crores have been sanctioned under the new RMLeA Scheme.

To mark the launch of the RML Counseling Centre, NHB organized a seminar for the Senior Citizens at Ahmedabad Management Association, today. The Seminar was inaugurated by Smt Jayshree Vyas, Managing Director, SEWA Bank and Prof. Errol D’Souza, IIM-Ahmedabad. Other dignitaries present at the Seminar included Shri V C Verma, Director, Ministry of Social Justice, Government of Gujarat, Shri P R Jaishankar, Assistant General Manager, NHB, Shri J K Khant, AGM-Representative Office, Ahmedabad, NHB and Shri Harvinder Bakshi, National Director, HelpAge India.

The release of NHB’s publication (Award Winning Essays) on the occasion of the World Habitat Day Celebration 2010 was celebrated in presence of Ministry of Housing and Urban Poverty Alleviation and Tourism on October 04, 2010.

Ministry of Housing & Urban Poverty Alleviation, Government of India jointly with National Housing Bank (NHB) convened a Meeting of State Level Bankers' Committee (SLBC) Convenor Banks from all States on June 8, 2010 to review the progress under Interest Subsidy Scheme for Housing the Urban Poor (ISHUP). Shri S.K.Singh, Joint Secretary to the Government of India, MoHUPA is addressing the participants. Sharing the dias are Shri R.V.Verma, Executive Director, National Housing Bank and Shri V.K.Badami, GM, NHB. The deliberations resulted in better understanding of various operational issues among the implementing banks for speedier implementation of the Scheme.