The Housing Sentiment Index

The MB IIMB HSI,jointly developed by IIM-B and magicbricks.com will determine how buyers and investors view the market, which in turn, influences their purchase decisions and aggregate demand. The index is likely to become an early indicator of how markets would perform in the future.

An HSI of 100 suggests that buyers expect prices to remain at current levels while values lower and greater than 100 suggest that buyers expect prices to fall and rise, respectively.

The Housing Sentiment Index (HSI) has dropped almost 20% over the past quarter across India, except in Bangalore, where sentiment has improved due to the uptick in the IT industry. The aggregate HSI dropped to 93 from 117 in the previous quarter.

The sentiment has worsened since the last quarter, until when buyers were expecting prices to rise. The percentage of buyers who expect prices to fall more than 10% has risen to 25% from 14% in the previous quarter. Almost a third of those surveyed said they were willing to wait more than a year before buying a property,

The only market in the country where buyer sentiment is intact is Bangalore, with an HIS of 106, where buyers expect prices to increase albeit marginally. In the other seven major cities, the sentiment has turned negative, with Mumbai having the lowest HSI score of 81. The Telengana crisis has pushed the HIS score for Hyderabad to 83, a drop of 30%. The biggest drop, of 38%, is for properties in the 2-5 crore category. This segment has seen sales drop considerably in the NCR and Mumbai as the well-heeled also start to feel the impact of the slowdown. In Mumbai, sales of luxury homes have fallen 35% over the past three quarters, while Gurgaon has witnessed a 40% drop in sales of such apartments.