RBI comes up with first of kind Housing Start-Up Index
Construction of housing units in Chennai has slowed down and the number of building permits issued too has reduced.
The Housing Start-Up Index, the first of its kind data covering 2009-2011, released by the Reserve Bank of India (RBI) and Ministry of Housing and Urban Poverty Alleviation (MHUPA) shows that by the middle of 2011, construction of housing unit activities had hit a slow patch.
In the first quarter of 2011, the number of housing construction was at a high — there were about 4,515 house starts. By fourth quarter this had reduced to 2,946. Year on year data also shows that construction peaked in 2010 but started to decline in 2011.
This reduction mirrors the low GDP growth witnessed between 2009 and 2010.
Until this, no Indian city had compiled Housing Start-up Index.
Only figures such as Residex, which indicate price movement, exist. Housing Start-Up Index is essential to understand the dynamics of the market.
It indicates the number of housing construction commenced in a given period, and also contains details about number of building permits issued for the same period.
A reduction in housing start-up numbers indicates that the demand and investment have come down.
In Chennai, the number of building permits issued in recent times also has reduced.
In the first quarter of 2011, about 1,200 permits were given and in the fourth quarter it had reduced to 770. Most of the permits issued pertain to Multiple Housing Units (MHU) such as apartments. From 2007 to the first quarter of 2011, about 90 per cent of permits issued pertained to MHU.
Since the second quarter of 2011, only MHU permits have been issued. This possibly indicates that construction of single housing units has stopped for the time being, if not totally phased out.
The time gap between issuing of permits and commencement of construction is not much.
Most of the construction had commenced within the same quarter or at the most within the same year in which the permit was issued.
The RBI and MHUPA collected data for 27 studies as a pilot project and published the House Start-Up Index for each one of them. It would shortly extend the survey to cover 300 more cities.
Keywords: Chennai construction industry, industrial slowdown, Housing Start-Up Index, India real estate, Indian metros housing stats, Ministry of Housing and Urban Poverty Alleviation, MHUPA, housing starts