As the real estate sector in India is witnessing a recovery after a long hiatus in activity due to the pandemic-induced lockdown and rising interest rates, housing prices in the country are also seeing a jump. The rates in the top-five cities in India have increased by up to 21 per cent in specific regions. Experts, however, said that since the interest rates are expected to rise further in the near term, it is right time for homebuyers to avail of a mortgage.
According to a joint report by Credai, Colliers and Liases Foras, “Residential prices, which have surpassed pre-pandemic levels, have been seeing an upward trend led by rising demand amidst rising prices of construction materials. Delhi-NCR saw the highest increase in residential prices at 10 per cent YoY, followed by Ahmedabad and Hyderabad with 9 per cent and 8 per cent year-on-year (YoY) increase, respectively."
The report, titled ‘Housing Price-Tracker Report 2022’, said the Delhi-NCR region saw the highest increase in prices across India at 10 per cent with an average carpet price of Rs 7,434 per sq ft in Q2 2022. “Golf course road saw the highest price rise of 21 per cent YoY, followed by Noida Expressway."
Sumeet Abrol, partner at Grant Thornton Bharat, told news18.com: “Despite the price surge, there is an increased demand and positive sentiments in the market to buy the new house. This is further driven by the upcoming festive season which creates it a positive atmosphere to own a house."
He added that if a person is keen to buy an underconstruction property, it is important to understand the timelines commitment by the developer because in most cases, the developer ends up delivering houses after several years while the requirement and buying capabilities of the buyer get modified during these years of wait.
Lenders have also been raising their interest rates on loans even as the RBI’s Monetary Policy Committee is hiking the key repo rate in the country to control inflation. The central bank’s rate-setting panel has increased the repo rate by 140 basis points in three consecutive hikes.
Atul Monga, CEO and co-founder of BASIC Home Loan, said, “Home loan rates have been on the rise gradually, which can signal that housing values will also be on an upward trajectory. It is always better to buy a home when the market conditions are in your favour."
He added that in the current economic environment, with home loan rates expected to rise further as the interest rates climb, this is probably the “best time" to avail of a mortgage.
On the sectoral prospect, Anshuman Magazine, chairman & CEO (India, South East Asia, Middle East & Africa) of CBRE, said, “The residential sector is poised for a strong 2022 as sales and new launches may see a robust performance after exhibiting resilience last year. Property prices have increased across most micro-markets and segments due to record sales and developers’ decision to pass on rising construction costs to buyers. We anticipate that Mid-end and affordable segments will continue to lead sales."
Magazine added that while the continued inflation and rising cost of financing might impact stakeholder sentiments in the near term, the sector’s overall health is likely to remain strong owing to positive homebuyer sentiments.