The reported move by the ministry of housing and urban poverty alleviation to introduce a housing start-up index that will measure the construction of housing projects is welcome. The much-needed index, likely to be introduced in December this year, was first suggested by RBI two years ago. Then the National Buildings Organisation under the ministry was deputed to collect data on building permits issued for new residential buildings in various cities. But the work for creating the index went into limbo because of data collection issues. Such an index, which exists in countries like the US, the UK, Germany, Canada and Australia, will help all stakeholders to gauge the demand and supply in the housing market. Housing starts are also considered a lead indicator of economic activity because of their strong forward and backward linkages with other sectors, and will help policymakers understand the pace of economic activity, investment trends geographically and consumer optimism on new housing. The index will also become an important input in monetary policy and help authorities detect property bubbles in their early stage. An early warning in case of a bubble can help home buyers take informed decisions on purchases and pay a realistic price for the property. The buyer and the seller can compare the index price with the offer price and this would help to keep speculators at bay.