It is widely believed that urban residential property in India is an excellent asset for large returns. But, is this borne out by data? Not really.
The NHB Residex (an index constructed by National Housing Bank based on "actual transaction prices") covers 26 cities all over India. The index stood at 100 in 2007 for each city.
For January-March 2014, the all-India index was 178.69 (arrived at by taking a simple average of the index levels for the 26 cities).
An increase from the base value of 100 in 2007 (on, say, 30-6-2007) to the recent value of 178.69 (on, say, 31-3-2014) translates to an average appreciation rate of 8.97 per cent annually.
This by itself is lower than the appreciation rates most people have in mind when they think of appreciation in the price of residential property in urban India.
So, the public beliefs are not correct. However, there is even more to the story.
Text: Gurbachan Singh, Business Standard
Image courtesy: Reuters