As part of its attempt to overhaul its residential property price index ‘Residex’, the National Housing Bank plans to come up with three sub-indices — one for tracking residential property prices (evaluated value versus registered value) and rentals, second for land value, and the third for building and construction materials, said a top official.

Sriram Kalyanaraman, MD and CEO, said NHB is reworking the entire Residex with an external agency (Liases Foras).

“We scrapped the Residex…We wanted to rework it as we felt there were some data inaccuracies….

“The Residex will be built on three legs eventually. Our goal is to have the Residex as a gold standard in the industry over a period of time,” he explained on the sidelines of a workshop on Credit-Linked Interest Subsidy scheme for the middle-income group.

Earlier, 26 cities were part of NHB’s Residex. The bank is planning to add two more cities to the index. Its coverage will be progressively increased to cover small cities over the years.

“We will include 35-40 cities over a period of one-and-a-half years. These cities will be statistically relevant to reflect the length and breadth of the country,” said Kalyanaraman.

According to the RBI, central banks monitor developments in residential and commercial property prices keeping in view their prime objectives of price stability, financial stability and growth. The housing market is a key link in the chain of events impacting the economy.

Mortgages being one of the biggest financial transactions of households and housing loan being the major component of households’ liabilities, central banks track property prices for fine-tuning their micro-prudential supervision and regulation.

Rationalising stamp duty

The NHB chief said the stamp duty currently varies from 9 per cent to 12 per cent in various States. “Now we are saying grade it (stamp duty) and rationalise it.

“We think stamp duty will definitely come down. At least, in the case of houses up to ₹25 lakh, it will get rationalised in progressive States and we will prove to them, once we have the data with the model, that it will not result in a huge revenue loss.

“.…We can understand the pressures on the State government for revenue but I think somewhere if you increase it disproportionately, you are sort of killing the golden goose,” he said.

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