Lack of affordability leads to muted growth in housing prices
House Price Inflation is moderating as per Reserve Bank of India's Housing Price Index (HPI). House price inflation reduced to 9.8% y-o-y in the October-December quarter of 2015. This is the lowest ever-recorded number since the first quarter of CY2010. It is also a significant reduction from the 13.1% housing inflation witnessed in the third quarter of CY2015. The previous low was in Q3FY13-14 when the rate of increase stood at 10.1%. On a annual basis, prices rose by 13.6% in 2015. In absolute terms, HPI increased to 221.7 from 218.2 as compared to the previous quarter. The base for 2010-11 is 100.
HPI tracks Mumbai, Delhi, Chennai, Kolkata, Bengaluru, Lucknow, Ahmedabad, Jaipur, Kanpur and Kochi. Out of the 10 cities, six reported a moderation in the rate of HPI. Jaipur witnessed a decline in prices on a y-o-y basis. Delhi and Mumbai witnessed around 10% rise in prices in the quarter. Lucknow reported the highest increase of 16.1%, while Kochi saw a rise of 8%
Housing prices have risen significantly over the last decade, making owning a home a distant dream for many poor and middle-class households. Due to this lack of affordability, there is a lot of unsold housing inventory in some top-tier cities. This may keep the rate of growth in housing prices muted.