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188 Economic Survey 2021-22

HOUSING PRICES

5.33 The residential housing sector was also affected by COVID-19 induced restrictions
through both supply and demand channels. Amidst initial COVID-19 restrictions, not only
construction of new houses slowed down, but launch of new housing projects also got delayed.
With the loss of income, uncertainty about future income, and stay at home orders, home buyers
delayed their housing purchases. After the initial COVID-19 induced restrictions were removed,
transactions in housing properties increased significantly, possibly because of pent up demand
and improvement in affordability in response to measures taken by government during the
pandemic, such as lower interest rates, reduction in circle rates, and cut in stamp duties, that
made houses affordable to buyers (Box 5). Besides, several major banks, mortgage companies,
and housing finance companies have significantly reduced their interest rates on home loans,
that fueled the revival in housing demand. During second COVID-19 wave (April-June, 2021),
transactions of housing properties were once again impacted adversely, but not as much as it
was seen during first COVID-19 wave (April-June, 2020).

5.34 National Housing Bank (NHB) RESIDEX HPI@Assessment Prices index (Base 2017-
18) captures the prices of residential housing properties for the transactions through primary
4
lending institutions. Data on composite index for prices and transaction records from NHB have
been used to analyze the impact of first and second COVID-19 wave on the housing transactions
and prices across a sample of 12 cities.

Box 5: Recent measures taken by government to enhance housing affordability

l Reduction in circle rates and stamp duties by various state governments like Delhi, West Bengal,
Maharashtra to boost housing sales.
Tax benefits

l Tax holiday to affordable housing projects until March 31, 2022.
l Eligibility for tax deductions for affordable housing announced in the 2019-20 budget has been
extended till March 2022. This tax deduction can be of up to 1.5 lakh rupees and will be provided
on interest paid on loans for self-occupied house owners (Budget 2021-22).

Schemes
Pradhan Mantri Awas Yojana – Urban (PMAY-U)

l PMAY-U aims to address urban housing shortage among the Economically Weaker Section (EWS)/

4 NHB RESIDEX tracks the movement in prices of residential properties in select cities on quarterly basis. From
the April-June, 2018 quarter the base year has been shifted to FY 2017-18. The revamped NHB RESIDEX is wider
in its geographic coverage and captures two Housing Price Index (HPIs) viz. HPI @ Assessment Prices and HPI
@ Market Prices for Under Construction Properties, both for 50 cities. The current data sources are valuation data
of Banks and HFCs for HPI @ Assessment Prices and primary & secondary market data for HPI @ Market Prices
for Under Construction Properties. The coverage is spread across 21 states in India, including 18 State/UT capitals
and 33 smart cities. The housing prices are classified on the basis of carpet area size at city level (INR/sq.ft.) for
units under three product category levels namely <=60 sq.m., >60 & <=110 sq.m., and >110 sq.m. The indices are
computed using Laspeyres Methodology, followed by calculation of a four Quarter Weighted Moving Average
with application of dynamic weights at product category level and static base year weights on the weighted moving
average product category level prices, across all the quarters starting from the new base year.