Is Mumbai more costly or Delhi? Analysing residential housing prices

I had posted a while back on launch of India’s official Index  that helps track prices in residential housing market. The index is developed by National Housing Bankand was named as NHB-Residex. The index was launched by then FM P. Chidambaram on 10 July 2007 but was not available on the website.

However, the good news is that index has been made available on the website. It is a delight as we have some official data to track developments in real estate. It is available for five cities – Mumbai, Delhi, Bangalore, Kolkata and Bhopal. The recent interview of NHB Chairman tells us that it would be expanded to 15 cities.

NHB’s RESIDEX, which is India’s first official property index, was launched in July 2007 for five cities — Bengaluru, Bhopal, Delhi, Kolkata and Mumbai — covering the period 2001-2005. It has since been updated to December 2007. The property index has been well received. It is being expanded to cover 15 cities and up to December 2008 which will be ready by March 2009. In another year, it will cover all cities with population above 10 lakh.  

Another feature of the data is that we have intercity data as well. So for instance within Mumbai we have data for Malabar Hill, Navi Mumbai etc. I have written number of posts on Mumbai’s housing market (which mainly said it is unaffordable) but have never had the statistics. So this data will help and it will also help compare the trends across cities.

So what are the trends like? We have data from 2001 – 2007, so 2001  is  the base year at 100. The growth trends are as follows:

 (in %) 2002 2003 2004 2005 2006 2007 Compounded Growth (2001-07)
Delhi 6.00 21.70 16.28 34.00 33.83 10.78 20.0
Bangalore 33.00 27.82 31.76 22.77 -1.09 15.07 20.9
Mumbai 16.00 13.79 12.88 19.46 25.84 19.64 17.9
Bhopal 20.00 13.33 13.24 16.23 7.26 35.42 17.3
Kolkata 15.00 12.17 14.73 16.22 4.65 31.67 15.5
  • The prices have grown fastest in Bangalore and Delhi on a compounded growth basis.
  • In Bangalore prices have tripled since 2001 with index in 2007 at 313. In Delhi it is 298, Mumbai – 268, Bhopal – 260 and Kolkata – 237. The price rise in Bhopal is surprising as the trend is nearly similar to Mumbai. 
  • However, there is a caveat in % comparison. We don’t have absolute prices in each of these regions and the picture is not complete. In Mumbai or Delhi, prices may have been much higher in 2001 than in Bhopal making it all the more expensive in former now. So, it would be wrong to say Bhopal is affordable as Mumbai or Delhi.
  • This is surprising actually, as I thought highest rise would be in Mumbai.Though price rise in B’lore is not surprising as it has become the IT hub and loads of people have moved there. The same is the case with Delhi with growth of suburbans like Gurgaon and Noida.
  • The highest yearly rise has come in Bhopal with growth in 2007 over 2006 at 35.4%
  • The only place and year where we see negative growth is in B’lore in 2006.
  • The growth trends are fairly diverse in each city with prices rising higher in some year and lower in another year. For instance, in 2007 growth slows in Delhi, recovers in Bangalore, moderates in Mumbai and rises in Bhopal and Kolkata.
  • However, growth is more consistent in Mumbai than others (standard deviation of growth in respective years is lowest in Mumbai). This indicates prices have been rising more persistently in Mumbai than others. This is evident from the graph shown here (scroll below) as well

How about top 10 regions where prices have risen the most in these cities?

  City Region Compounded Growth Rate
1 Kolkata Rajarhat 38.6
2 Delhi Dakshinpuri, Hari Nagar, Jahangir Puri etc. 28.9
3 Mumbai Thane 26.9
4 Bangalore Madivala, Banaswadi etc 25.1
5 Mumbai Mulund etc 24.2
6 Delhi Mayur Vihar,Dwarka & Pitampura 23.2
7 Mumbai Virar Vasai 23.2
8 Bangalore Jaya Nagar,Rajaji Nager etc 23.2
9 Delhi Govind Puri, Raghubir Nagar etc. 22.6
10 Kolkata Madyam Gram 22.4
  • Surprise, surprise….Rajarhat in Kolkata tops the list. One would expect Mumbai’s and Delhi’s elite areas to top the list. Infact, within Delhi and Mumbai none of the premium region tops the list. Infact Malabar Hill is way down the list at 45 in a total list of 60
  • On checking Rajarhat profile in Wikipedia, I understand the reason:

Many high-profile industrialists of national and international standing are investing in the township with the cooperation of the Government of West Bengal, to make it one of India’s major industrial hubs. The place is already known for being one of the most impressive information technology and computer engineering hubs of India after the Indian silicon valley of Bangalore. The Government of West Bengal, along with some private and public sector companies, is working on providing the township with latest infrastructure and amenities to make it an ideal and happening industrial and residential township.

What about the bottom 10 regions where prices have risen the least ?

  City Region Compounded Growth Rate
1 Kolkata Bhawanipur etc 0.2
2 Kolkata Alipur etc 4.9
3 Mumbai Other Municipalties 8.9
4 Mumbai OM 8.9
5 Kolkata Jodhpur etc 9.6
6 Kolkata Rajpur Sonarpur 9.8
7 Mumbai Kalyan 10.0
8 Kolkata Howrah 10.0
9 Delhi South Ext & Sagdarjung Enclave 10.2
10 Bhopal Raisen Road etc 10.4
  • Again a surprise with elite areas in Kolkata (Alipur etc) and Delhi (South Ex etc) in the bottom list

What is the comparison with US housing prices?

I also checked the prices in US for a comparison. If we take the OFHEO index and put 2001 value as 100. The highest value for the index is noted in April 2007 at 153 implying a compounded growth rate of 7.5% per annum. Taking the Case-Shiller Composite 20 Index, which starts from 2000. The index reaches its peak in July 2006. The compounded growth between 2000-06 is around 12.5%. Case-Shiller also present a national index for US and growth between 2000-06 is around 10.95% p.a.

We don’t have a national index but even if we take city growth, the prices in India have risen much higher. Again, growth levels in India differ to US and the growth in house prices is expected to be higher in India. But by how much?

Let us look at US data once again. Since, the peak, prices have declined by 8.8% as per OFHEO index , 21.0% as per Case-Shiller National Index and 21.7% as per Case Shiller Composite. There is no uniformity as seen in the case of appreciation. More analysis has to be done.


  • Prices have risen by 2.5-3 times in all the 5 cities. This is in line with the point I made in previous post – what good are 5-10% discounts when prices have risen manifold. 
  • The prices  in various regions have risen higher not in famous addresses but across the city. The prices may have not increased in wannabe addresses as much as they were very high to begin with. However, with prices zooming in low cost/far-off regions as well the housing has become highly unaffordable. And hence the public outcry.  
  • For instance, most people in Mumbai travel to South Mumbai for work and both Virar and Vasai (North Mumbai) are really far off from these workplaces. Hence, those who look for houses in these areas are more likely to be middle/low income people.  However,  in Virar/Vasai etc prices have risen by nearly 25% per year. This is actually the main problem with prices rising even in far flung areas really sharply.

4 Responses to “Is Mumbai more costly or Delhi? Analysing residential housing prices”

  1. kalpesh Says:

    please notify me the follow up article

  2. Research papers on Indian housing sector « Mostly Economics Says:

    […] NHB Residex. It includes data till Jan-Jun 2009. Previous analysis (till 2007) can be found here. […]

  3. unicon india Says:

    yes mumbai is more then costly comparison to delhi.

  4. select your broker Says:

    yes.. no doubt.. mumbai is more costly compare to delhi. because there live more rich people those can effort more prices compare to delhi people..

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