India Gets a Housing Start Index But it’s of Two Years Ago


RBI has, along with the Ministry of Housing and Urban Poverty Alleviation (really), released an index on housing starts in India. (Housing Start Up Index or HSUI)  While data remains fiendishly difficult to get, they have compiled statistics from 2009 to 2011 to estimate the number of new housing units being created in India.

How They Do It

They admit that it’s too difficult to get actual start information in India. A survey can take an inordinate amount of time.  At best, you can get an idea of when projects are likely to have started based on the “permits” granted by local authorities to builders and land owners.

In general, permits will take upto 24 months to result in actual construction starts. So they will have an idea of how many building permits have been issued, and a detailed survey once in three years will tell them how many have actually started. They will use this data to find out how many permits issued in a quarter result in a house constructed in that quarter,and how much will spill over to the next quarter and subsequent months after that.

(For example, a city may issue 2000 permits today, but only 200 of it gets executed this quarter. Another 2,000 will start in the next quarter, another 3,000 on another subsequent one etc.)

The past data is then used to calculate indexes for each city, and then collapsed into an India-wide Housing Startup Index. This will (hopefully) be revealed every quarter.

Unfortunately for now we only have data till 2011. And we don’t have data for Delhi, Hyderabad and Mumbai (“incomplete”). Here’s the chart of the Housing Index from 2009 to 2011:

Housing Start Index

Currently this has absolutely no use, other than knowing that starts tapered off. The latest data is March 2012, which is way too far away to have made a substantial difference to a buyer or a seller, or even an investor in the stock. I would do city-wise charts but I think we should wait for the latest data to come in so that we have more recent charts that can be used to figure out property trends (and thus, construction trends).

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  1. Interesting but the time delay between issue of permits and actual construction start is an issue and may not show up in the statistics. In India it takes several months or years to get approvals and start construction and sales also takes time. There should be some simplification in approvals for construction so that more homes can be constructed at a faster pace, which will further meet the demand for housing and also trigger spillover demand for related products and services including furniture, paints, cement, hardware, etc.

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