According to a joint report by real estate association CREDAI and domain experts Colliers and Liases Foras, a resurgence in demand for residential real estate has resulted in an average 5% increase in prices across the top eight cities — Delhi-NCR, Mumbai, Kolkata, Pune, Hyderabad, Chennai, Bengaluru, and Ahmedabad — while registering a slight decrease in unsold stocks during Q2 of 2022 (April-June).
Residential property prices, which have exceeded pre-pandemic levels, have been growing due to rising demand and rising building material prices.
The sales surge that began late last year continued in Q2 2022, fueled by pent-up demand and excellent prices.
To offset the impact of inflation, the central bank (RBI) continues to raise repo rates, and banks are projected to raise lending interest rates, particularly those on house loans.
Rising millennial homeownership, fueled by more discretionary income and a propensity to move to larger places with better amenities, has fueled a surge in housing demand in recent quarters.
For the record, the Reserve Bank of India’s monetary policy committee unanimously resolved last week to hike the repo rate by 50 basis points to 5.40 percent to curb stubbornly rising inflation. The most recent increase pushes the repo rate above pre-pandemic levels of 5.15 percent.
Raising interest rates normally decreases demand in the economy, assisting inflation to fall.
In keeping with the worldwide trend of tightening monetary policy to lower inflation, the RBI has raised key repo rates — the rate at which a country’s central bank loans money to commercial banks — by 140 basis points so far.
In July, retail inflation in India exceeded the Reserve Bank of India’s upper tolerance range of 6% for the sixth consecutive month.
The RBI has raised the repo rate in response to inflationary concerns, and banks have already begun to raise lending rates. The impending holiday season, on the other hand, is anticipated to keep market sentiment high, resulting in stronger sales.
Following the RBI’s rate hike, numerous banks and home finance businesses increased loan rates as well. This is projected to increase EMIs for loan recipients.
Prices are expected to remain range-bound. We are seeing early evidence of developers absorbing the burden of rising interest rates through reduced EMI packages. Sales volumes are expected to rise as fresh stock with Christmas discounts becomes available.
Assetmonk is a premier real estate marketplace that offers 14-21% IRR investment options in key Indian cities such as Bangalore, Chennai, and Hyderabad. Assetmonk provides high-quality investment options after doing expert due diligence. Come see us and invest with us!
During the April-June quarter, residential real estate prices in India increased by 5% FAQs
The real estate market in India will grow to Rs. 65,000 crores (US$ 9.30 billion) by 2040, up from Rs. 12,000 crores (US$ 1.72 billion) in 2019.
Property prices in India are expected to rise 7.5% this year on a pan-India basis, the fastest growth in five years. The average house price is expected to rise 6% next year and 6% in 2024.