India (Common Wealth) _ According to a Reuter’s survey of real estate analysts conducted almost three months ago, the Indian housing market would continue to be robust in the face of rising interest rates and a gloomy prognosis for the global economy. It is believed that India has shown tenacity in overcoming a ten-year depression due to high demand, despite a global pattern of declining home prices and rising mortgage rates.
The average home price is expected to grow 5.5% and 5.0% this year and next year, according to a Reuter’s survey of 13 real estate market experts conducted between February 16 and March 3, 2023. Similar results were obtained in a separate Reuter’s poll conducted in December For the fiscal years 2023–24 and 2024–25, consumer price inflation is expected to be slightly higher than expected at 5.1% and 4.5%, respectively.
According to Divyesh Shah, Associate Director at CARE Ratings, “Post the COVID-19 pandemic, the urge to own a house is higher than ever, and as a result, the residential segment has witnessed strong demand.” Shah continued, “While rising inflation and interest rates may have a limited immediate impact on demand, the industry is prepared for stable expansion in the coming 2-3 years, and as a result, house ownership is anticipated to expand.
The Reserve Bank of India (RBI) has increased the repo rate by a total of 250 basis points since May 2022, and another 25% increase to the policy rate is anticipated to combat inflation in April.
According to the survey, all but one of the 13 analysts predicted that homeownership will increase over the coming years, in part because there is a strong preference for buying rather than renting a property.
In India’s economy, buying a property has traditionally been more popular than renting. According to Abhinav Joshi, Head of Research at CBRE India, the pandemic’s unpredictability increased the need for security and house ownership.
In one of the most populated nations in the world, where millions live in extreme poverty, the persistent lack of cheap housing continues to be the main worry, according to the research. Concerns about the sustainability of the current housing market trend are further raised by a recent rise in unemployment, it continued.
In the Reuters survey, all but one of the 11 analysts who responded to a different question predicted that the affordability of buying will worsen in the upcoming year. Only one person predicted improvement.
“Affordability will only get worse in the upcoming quarters due to rising prices. The more affluent purchasers will continue to purchase real estate, but this will have an effect on buyers in the affordable and mid-segment, according to Anuj Puri, chairman of ANAROCK Property Consultants.
The poll’s geographical breakdown revealed that prices in Bengaluru, Chennai, and Delhi, as well as the surrounding national capital region, will increase by 5% to 6% this year. Mumbai’s housing market, meanwhile, was anticipated to expand at a slower rate of 3.5%.