With the impact of inflation and rising interest rates on the Indian property market, property prices have continued to rise since the start of this year. Since the lifting of lockdown restrictions, major cities in India have seen strong demand for housing with an increase in sales of high-end and luxury homes, driven by an increase in purchasing power and disposable income due to an increase employment levels. Recent trends have shown that people today desire larger homes with better amenities due to rising living standards and the growing need for larger residences that can complement the hybrid work culture.
Indian real estate has continued to experience strong traction throughout the current calendar year. The return of labor to metropolitan cities, coupled with recent festive spending, has boosted demand and ensured stable sales for the first 10 months of 2022. The real estate sector in major Indian cities has been bullish despite the geopolitical issues. That said, the RBI has raised rates by a cumulative 190 basis points since May 2022 and is expected to raise them further in the future, which could put some pressure on demand for the rest of the year, even if the he impact of rising interest rates would be felt. a little less in luxury than in affordable sectors.
Strong holiday season sales, combined with the aforementioned factors, have contributed to a boom in real estate demand this year. Meanwhile, a few reputable banks have cut interest rates and waived processing fees to boost credit drawdown amid holiday season spending showing growth in the real estate sector in October 2022. However, rates Reduced loans have been offered for a limited time only, and with the sector still in a rate hike cycle, it could see a further rise in its interest rates. Therefore, investors are advised to plan their borrowings carefully, as home loan rates are likely to remain high for at least 4-5 quarters. In such cases, home buyers may opt for new launches rather than move-in-ready properties as they are cheaper.
With the improving fiscal position, India’s economy is expected to grow at or above 7% in FY23; and going forward, it can be predicted that the demand for luxury homes and high-quality real estate developments would remain stable, regardless of interest rates or price increases.
Overall, from a long-term perspective, no pressure is expected on the demand or price front for the foreseeable future. Projects developed by reputable names will continue to see steady demand and growth in the future.
The opinions expressed above are those of the author.
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