The period between 2002-2011 was a golden period for real estate investments. Now we have some data to understand the current situation. The National Housing Bank (NHB), the regulator of housing finance companies have launched a revamped RESIDEX, a housing price index. The index claims to offer home prices of 50 cities across the nation. This should help us get some idea about which way the real estate prices have gone over the last few years. And for the first time we should be able to calculate the actual city wise returns. Let’s take a look at Table below. It shows the annual returns of some selected cities between June 2013 and March 2017. It also shows the one-year return between March 2016 and March 2017.

	Name of the city	Annual Return  (June 2013 and March 2017) (in %)	One-year return (March 2016 and March 2017 )(in %)
1	Mumbai	6.7	2.8
2	Delhi	-2.6	5.8
3	Bengaluru	7.3	7.5
4	Kolkata	6.5	2.9
5	Chennai	7.1	10
6	Pune	7.2	9.5
7	Nagpur	5.6	11.2
8	Nashik	2.5	-0.25
9	Navi Mumbai	3.4	-8.9
10	Panvel	2.9	-7.1
11	Thane	7.1	2
12	Coimbatore	-0.8	-10.5
13	Gandhinagar	-7.8	-11.1
14	Greater Noida	4.3	0
15	Noida	2.7	0
16	Gurugram	4.8	7.4
17	Jaipur	5.2	-1.5
18	Vizag	10.3	24.7
19	Thiruvananthapuram	7.7	-0.5
20	Hyderabad	4.1	2.2
21	Ranchi	-2.6	-17.7
22	Bhubaneswar	1.5	7.5

Source: https://residex.nhbonline.org.in/NHB_Residex.aspx The median rate of return on real estate investment across the 50 cities is 4.3 per cent per year. We need a return of atleast 10% in order to meet the regular expenses for upkeep of real estate and to beat the inflation. Regular expenses would include the maintenance charge that needs to be paid to the housing society every month and property tax that needs to be paid every year. Of course, if the home could be put on rent, the rental yield would work out to around 2 per cent per year. The situation has gotten worse in the one-year period between March 2016 and March 2017. This basically means that real estate returns across the country have been subdued lately. In fact,the real returns is negative in many cities. Real estate hasn’t made a great investment for a while. Let us analyse the reasons? Negatives a) Those who have already invested in real estate have a substantial amount of black money invested in it. The trouble is that if they sell right now, there isn’t much they can do with the black money that they will get in the form of cash after the sale. b) In some cases, the investors are sitting on losses and they are waiting for prices to rise before they sell. This is loss aversion bias.This basically leads to a tendency among investors who are facing losses on their investment to continue to hold on to the losses, until they reach the positive territory again. This leads to a slow correction in prices. c) In some other cases, investors are anchored on to the high returns that their friends, relatives and acquaintances, had made during the earlier years They are waiting for that era to return. d) Up until last year, home loans taken to finance self-occupied homes, were allowed a deduction of up to Rs 2 lakh for the interest paid on the home loan against taxable income. There was no such limit for rented out properties.But in the Finance Act of 2017-18, the deduction of interest for rented houses has been limited to Rs2 lakhs. This has plugged the tax deductibility for investment in real estate. Positives e)All builders have to get their projects registered with RERA(Real Estate Regulatory Authority) before 31st July 2017 before inviting investors to buy properties.This is very consumer friendly for real estate buyers. f) The applicable GST for real estate projects is 18% but the effective rate is 12% excluding the land cost. Since the builders will get input credit for the materials purchased, the effective burden on the buyers will be less than 12% on account of GST. g) The liquidly available in the Banking system post demonetization has enabled reduction in interest rate on home loans Going forward there is a need for a genuine price correction in real estate sector before the demand picks up again. If the builders want to continue to make money in the years to come, it’s time they addressed the genuine home buyers as well.The residex data provides city specific information to buyers on current prices and trends. It is time to wait and watch.