If rising housing affordability is any indication, India’s residential real estate market will see increased sales in the coming months.
The current home loan rates are the lowest in four decades and are expected to remain low for another six to twelve months; thus, now is the best time for homebuyers to purchase. The growth in the economy and real estate has been sharp.
Factors such as the RBI injecting much-needed liquidity into the market, as well as numerous government and developer concessions such as stamp duty exemptions, have extended the best buying opportunity for homebuyers. For lending purposes, banks are now distinguishing between strong and poor developers, so improving balance sheet efficiency, avoiding over-leveraging, and remaining well-capitalized would help developers float well in the market.
As India’s Coronavirus vaccination campaign continues, the benefits of the vaccination program can be seen in the country’s real estate market. Following a record low in the previous two quarters due to a drastic increase in the number of infections, home sales in India’s prime residential markets increased by nearly 70% in the third quarter, with new supply also increasing significantly. Despite the general gloom, housing prices in key markets have begun to recover, indicating that consumers have recognized real estate’s value and want to take advantage of low home loan interest rates. Interest rates indeed significantly impacted the sales growth since the end-user had been anticipating it and had received it.
If rising housing affordability is any indication, India’s residential real estate market will see increased sales in the coming months. In 2021, the new housing supply will continue to be affordable and mid-segment as developers try to capitalize on high pent-up demand.
Homebuyers can currently get home loans for as low as 6.65 per cent annual interest, despite the RBI’s decision to keep the repo rate unchanged. In January 2020, the average home loan interest rate was 8%, which is a significant difference. However, buyers should make a quick decision of purchasing a home because the situation could change if the banking system’s stance changes. Despite the RBI’s decision to keep policy rates unchanged on April 7, 2021, SBI increased home loan interest rates in April, indicating that banks might be moving away from the current historically low-interest rate regime.
Even though they are feeling the heat of rising raw material costs, developers have refrained from raising prices. Overall, the market is ideal for homebuyers to realize their dreams before the market returns to the old interest rate regime and developers raise prices, which is expected to happen in the next 6-12 months.
Source: https://www.financialexpress.com/