Housing price inflation down

Published on May 09, 2015 00:14:59 AM
Hyderabad records lowest at 40% growth Housing price inflation has declined to nearly four-year low to below 4 per cent, as per ‘Residential Asset Price Monitoring Survey’ released by the Reserve Bank of India (RBI) that covers transaction level data on housing loans disbursed across select 13 cities, from select 35 scheduled commercial banks/housing finance companies in India through various modes.

Housing prices rose by 61 per cent during the last four and half years, with Jaipur recording the highest growth of 78 per cent, whereas the lowest growth was recorded in Chandigarh and Hyderabad at around 40 per cent. House price inflation witnessed its peak during 2012-13 and has declined in the recent period. The annual growth in housing price index and CPI-Housing Rent Index has been fairly similar in the last seven quarters, the RBI said in a statement.

"House prices had been growing at a higher rate than that of housing rent. However, in the subsequent quarters, house price inflation and housing rent inflation moved hand-in-hand. A decreasing trend in median LTV (Loan-to-Value) over the quarters is indicating increased cautiousness of banks in sanctioning housing loans. LTV ratio is one of the macro-prudential tools used by banks to control their exposure to decline in house prices," the statement said.

The RBI has prescribed an upper limit of 80 per cent on LTV for housing loans above `20 lakh and 90 per cent for housing loans up to `20 lakh, respectively, with effect from December 23, 2010. "Movements in median EMI-to-Income ratio, median House Price-to-Income ratio and median Loan-to-Income ratio, did not indicate any notable variation in housing affordability over the quarters," the survey said.

While comparing the annual growth in housing prices of India with other countries, the RBI survey said that housing price inflation in the US and UK have been moving slightly in the upward direction since the first quarter of 2013-14. "However, as in the case of India, house price inflation in other Asian countries like China, Indonesia and Malaysia have been contracting in the recent few quarters," it said.