What’s Driving India’s House Price Index Up by 3.1% in Q4 FY25?
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Synopsis
Discover the latest insights on India's house price index, which has risen by 3.1% in Q4 FY25, mirroring the previous quarter's growth. With Kolkata leading the way, learn how these trends impact the real estate market and household financial decisions.
Key Takeaways
- All-India HPI increased by 3.1% in Q4 FY25.
- Kolkata led with an 8.8% growth in house prices.
- Kochi was the only city to experience a decline at 2.3%.
- Residential investment is positively correlated with rising house prices.
- Understanding HPI trends is crucial for monetary policy.
New Delhi, June 21 (NationPress) The house price index (HPI) across India has shown an increase of 3.1 per cent during the January-March period (Q4 FY25), sustaining the same momentum as observed in the previous quarter (Q3).
The Reserve Bank of India (RBI) published its quarterly HPI data for Q4, which is derived from transaction-level information collected from registration authorities across 10 prominent cities.
According to an RBI statement, "The all-India HPI saw a 3.1 per cent year-on-year increase in Q4 2024-25, matching the 3.1 per cent growth from the previous quarter and down from 4.1 per cent growth a year earlier; annual HPI growth exhibited significant variability among cities, ranging from an impressive increase of 8.8 per cent in Kolkata to a decrease of 2.3 per cent in Kochi."
On a quarter-to-quarter basis, the all-India HPI rose by 0.9 per cent in Q4.
Major cities such as Bengaluru, Jaipur, Kolkata, and Chennai reported a sequential increase in house prices during this latest quarter, as indicated by the data.
Kolkata led the rankings with an 8.8 per cent surge, while Kochi was the sole city to experience a downturn, recording a 2.3 per cent decline. The index includes the following 10 cities: Ahmedabad, Bengaluru, Chennai, Delhi, Jaipur, Kanpur, Kochi, Kolkata, Lucknow, and Mumbai.
The Central Bank remarked, "A house is not merely an asset; it serves as a vital consumption good for families, providing shelter and various services. Changes in house prices can influence households' perceived lifetime wealth, thus impacting their spending and borrowing decisions."
As house prices rise, the value of housing relative to construction costs increases, making new construction more profitable when prices exceed these costs.
Consequently, residential investment showcases a positive correlation with rising house prices. Furthermore, fluctuations in house prices can influence bank lending and vice versa. Gains in house prices also enhance housing collateral.
The potential bidirectional relationship between bank lending and house prices can lead to reinforcing cycles within credit and real estate markets. This suggests that house prices may impact economic activity through household private consumption, residential investment, and financial system credit allocation. Therefore, understanding trends in this asset class is crucial for the formulation of monetary policy.
Point of View
The recent increase in India's house price index by 3.1% in Q4 FY25 reflects a resilient real estate market amidst economic fluctuations. The disparity in growth across cities like Kolkata and Kochi underscores the diverse dynamics at play, emphasizing the need for tailored approaches in policy formulation. The emphasis on housing as a crucial asset for households further highlights its significance for economic stability.
NationPress
21/06/2025
Frequently Asked Questions
What is the house price index (HPI)?
The house price index (HPI) measures the relative changes in residential property prices over time, reflecting the overall health of the real estate market.
Which city saw the highest increase in house prices in Q4 FY25?
Kolkata recorded the highest increase in house prices at 8.8% in the January-March period (Q4 FY25).
How does the HPI affect household spending?
Changes in the HPI influence households' perceived wealth, affecting their spending and borrowing decisions.
What was the all-India HPI growth rate in Q4 FY25?
The all-India HPI increased by 3.1% year-on-year in Q4 FY25, maintaining the same growth rate as the previous quarter.
What impact does rising house prices have on construction?
As house prices rise above construction costs, new constructions become more profitable, driving residential investment.
