Housing demand expected to remain strong despite rising interest rates: Industry
Industry experts believe that the country’s residential market has seen many structural changes over the past six years after four consecutive hurdles such as demonetization, the formation of the Real Estate Regulatory Authority (RERA), the GST implementation and the COVID-19 pandemic. Longer-term growth starts now.
The FPCE, the umbrella body for homebuyers, credits the RERA authority formed under the Real Estate (Regulation and Development) Act 2016 with improving home buying sentiment.
All major listed real estate developers posted record sales in the last fiscal year (2021-22) and their sales figures are expected to improve further in the current fiscal year (2022-23).
However, the overall increase in the RBI’s policy rate to 1.40% this year and the shifting of the burden from banks to home borrowers has slowed the pace of house sales.
Apart from this, the strong growth recorded in house prices over the past year has also forced many people to postpone their home buying plans.
Prices rose by an average of 5% year-on-year in the June quarter due to higher construction costs, particularly cement and steel. But developers and brokers believe the rise in costs is short-lived and the holiday season will boost demand.
Real estate consultancy Anarock said that this year sales of residential units in seven major cities across the country – Delhi-NCR, Mumbai Metropolitan Region (MMR), Chennai, Kolkata, Bengaluru, Hyderabad and Pune have registered a pre -Covid, i.e. 2019. 2 61,358 units. However, sales will still be below the figure of 3.43 lakh units in 2014.
Anarock Chairman Anuj Puri said the rise in the repo rate had some impact on home sales in the June quarter, which are down 15% from the previous quarter.
Managing Director and CEO of Macrotech Developers, Abhishek Lodha, said India’s housing industry is in the early stages of structural recovery. Keeping an optimistic view of growth for the next 10 to 20 years, he said a modest increase in property prices bodes well for the market.
“Historical data shows that there has been no impact on housing demand for home loans up to 8.5-9% interest rates,” Lodha said in a conversation with PTI.
Pirojsha Godrej, Executive Chairman of Godrej Properties, said the market has seen the best profitability over the past two years as interest rates have been reduced from 6.5 to 7 percent. Real estate prices during this period have also remained more or less stable for the past seven to eight years.
He said that despite rising interest rates and rising property prices, the level of the economy remains attractive.
Abhay Upadhyay, chairman of FPCE, the apex body for homebuyers, said the application, which has been going on for more than a decade, is now turning into a real deal. He said the pace of home sales could continue provided builders deliver on their promises of quick apartment deliveries.
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