What is Housing Sentiment Index and what it means showing a rise in Quarter 3, 2013?

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For those who are new to this term, Housing Sentiment Index (HSI) is jointly developed by Magicbricks and IIM Bangalore. The index is based on a survey conducted online. The respondents are prospective home buyers. The HSI questionnaire captures buyer sentiment on house prices in terms of their own assessment and thinking, the degree to which they think the house prices will move including the micro market level preferences within each city. It contains basic demographic information which includes financing methods and type of property preferred. In short, the HIS captures buyer sentiment and serves as a lead indicator for the residential housing sector. HSI is calculated by taking a difference of positive and negative sentiments and careful adjustments of neutral responses and other biases which creep into any surveys. The value of HSI can range from 0 to 200. But what do the scores actually mean? A score of 100 indicates neutrality, which in reality means the people do not expect house prices to rise or fall. A score of 200 on the other hand would mean that all respondents expect the prices of buying a house to go up, while a score of 0 would mean that all respondents expect house prices to go down.

In such a market, where a normal home buyer would go in to his consultant and ask him this golden question- Will the house prices increase in the coming days or go down, the HSI comes as a valid substantiated sentiment of the market in question. The answers do not have to be correct always, but the answer can always be based on the sentiment the people have in the current scenario, thus making it worthwhile for the buyer, be it an end user or an investor. The markets may not generally follow the trend and may prove wrong, but it is something to go with rather than have nothing at hand to ponder with when taking a major decision of our lives, which are our real estate investments.

32% of the respondents for Q3 were those who already own a house who are looking at owning another property with roughly half wanting to buy it as investment and other half buying it for residential purposes. 53% are presently in a rented accommodation, while 15% live with parents or relatives. 50% of buyers would like to go for financing by a bank while 18% would prefer to sell current assets.

An overall increase in HSI means that the buyer sentiment is rising. An aggregate score of 117 was achieved as HSI for 8 cities surveyed. The last quarter had an HSI of only 93 and thus 117 is very positive for the market. The seller HSI was 156, which was way higher than that of the buyer sentiment. With Noida HSI increasing by 33%, it confirms the market as one with a lower investment range. Gurgaon HSI rose by 22%. Hyderabad was close with 21%.

What lies in the future will soon unfold but the sentiments of buyers increasing is definitely a positive sign of things to come. Real estate can’t be subdued for long, and HSI rise proves it.

The author Vineet writes for Capital Tree, the premier real estate consultant in Gurgaon. reach us at http://www.capitaltree.in/contact-us.php