The house price index (HPI) across India increased by 3.1 per cent in the January-March period (Q4 FY25), maintaining the same pace as the previous quarter (Q3).

The Reserve Bank released its quarterly HPI data for Q4, based on transaction-level data received from the registration authorities in 10 major cities.

“All-India HPI increased by 3.1 per cent (YoY) in Q4 2024-25 as compared with 3.1 per cent growth in the previous quarter and 4.1 per cent growth a year ago; annual HPI growth varied widely across the cities - ranging from a high growth of 8.8 per cent (Kolkata) to a contraction of 2.3 per cent (Kochi),” according to a RBI statement.

On a sequential basis, all-India HPI increased by 0.9 per cent in Q4.

Bengaluru, Jaipur, Kolkata and Chennai are the major cities recording a sequential rise in house prices during the latest quarter, the data showed.

Kolkata topped the chart with an 8.8 per cent increase, while Kochi was the only city to witness a contraction, recording a decline of 2.3 per cent. The 10 cities covered in the index include Ahmedabad, Bengaluru, Chennai, Delhi, Jaipur, Kanpur, Kochi, Kolkata, Lucknow, and Mumbai.

“House is not just an asset but also a durable consumption good for households, providing shelter and other services. A change in the house price affects the households’ perceived lifetime wealth and hence influences the spending and borrowing decisions of households,” according to Central Bank.

An increase in the house price raises the value of the housing relative to construction costs; hence a new construction is profitable when house price rises above the construction costs.

Residential investment is, therefore, positively related with house price increase. House prices also affect bank lending and vice versa. Further, house price gains increase housing collateral.

The potential two-way link between bank lending and house prices give rise to mutually reinforcing cycles in credit and real estate markets. These indicate that house prices may affect economic activity through private consumption of households, residential investment and credit allocation of the financial systems. Thus, understanding the price trends of this segment of asset class is important for monetary policy formulation.