Demand for Homes Increase Despite Hike in Interest Rates

The property market in India currently looks strong. Even through the lenders and banks have increased interest rates on property loans in recent months, the momentum of property sales looks impressive. Particularly, property sale and mortgage rates in the leading seven cities in India will probably break the pre-pandemic levels, as per industry players.

The real estate sector in India has been undergoing continuous disruptions due to several factors. Starting with demonetization, there were reforms like RERA and GST. The pandemic wreaked the final havoc on the industry. Therefore, the last five to six years have been a bouncy ride for the industry. Now that the industry has consolidated, it seems that the sales figures will further rise. A large part of the credit for this rebound goes to RERA for devising transparent policies which bolstered buyer sentiments.

In recent months, RBI has increased the interest rates by as much as 140 basis points. Since this burden passes on to the homebuyers through the banks, the customers’ sentiment is likely to have slightly dampened. Besides, this might have slowed down the momentum marginally. Also, experts state that housing prices have undergone some increment in recent years.

In the June quarter, property prices increased by 5% on average as a result of higher cost of raw materials like steel and cement. However, brokers and developers are hopeful that the demand in the short term will increase significantlyfrom the festive season. According to leading property consultants, sales of real estate this year in the top seven cities are likely to cross 2,61,358 units. It was back in the pre-pandemic days in 2019 that such impressive numbers were last recorded. The seven cities under consideration include Pune, Hyderabad, Bengaluru, Kolkata, Chennai, Mumbai, and Delhi-NCR. Therefore, the housing industry in India is currently at the beginning of an upcycle. Some of the factors that will contribute to this growth include growth in wages, and the relevance of quality housing in the cities after the pandemic.

Experts also believe that a slight appreciation in property prices in the coming months would be a positive development for the market. This would also contribute to the economic growth of the country.