The Reserve Bank of India (RBI) has initiated an exercise to set up a housing start-up index (HSUI) to track new residential projects in 31 major cities and measure the changes in construction activities.

The HSUI will cover new residential projects in all major cities including Delhi, Mumbai, Chennai, Kolkata and Bangalore, among others, the RBI said while inviting quotations from consultancy organisations. The RBI said housing start-ups in a particular quarter would be estimated from the permits issued in that quarter and the various past quarters by using the rates at which the permits got converted into start-ups in the recent past.

“The periodicity of this survey will be once in three years. The agency needs to visit about 350 sites to get the details on house start-ups in each city,” the RBI said in the tender notice. The housing index will give insights into consumer activity, as construction of new houses typically requires large investment.

“It depicts forward trends in the economy. An economy that is growing rapidly has an increased demand for housing and HSUI could be used to forecast demand for new houses,” it said. The index would also act as an indicator of economic growth as more houses would lead to increased demand for input materials like steel, cement and credit.

The data on housing would be collected for eight quarters. This data will be processed through a co-efficient matrix to arrive at the actual data. It can be noted that the National Housing Bank (NHB) had last year decided to expand an index of residential real estate rates from the five cities it currently covers to 36 cities. The index, called the NHB Residex, which is the country’s first official residential property price index, now covers Bangalore, Bhopal, Delhi, Kolkata and Mumbai.