According to a Reuters survey of real estate analysts, who haven’t significantly revised their predictions from three months ago, India’s housing market will be robust despite rising interest rates and a gloomy prognosis for the global economy.
India has shown resilience and is rebounding from a ten-year downturn due to strong demand, defying a global pattern of declining house prices as mortgage rates climb and constrain affordability.
The Indian housing sector, a significant employer in a nation with 1.4 billion people, most of whom are low-skilled, is anticipated to continue to contribute steadily to economic activity in Asia’s third-largest economy.
According to poll medians from a survey of 13 real estate market specialists conducted from February 16 to March 3, the average home price was predicted to increase by 5.5% this year and 5.0% next.
These predictions were basically unchanged from a survey conducted in December and slightly above projections for consumer price inflation for the fiscal years 2023–2024 and 2024–2025 of 5.1% and 4.5%, respectively.
The desire to own a home is stronger than ever in the wake of the COVID-19 pandemic, according to Divyesh Shah, associate director at CARE Ratings. As a result, there has been strong demand in the residential market.
“Although rising inflation and interest rates may have a short-term impact on demand to some extent, the industry is prepared for consistent expansion over the next two to three years, which will likely lead to a rise in home ownership.”
In an effort to combat persistently high prices, the Reserve Bank of India has increased interest rates by a total of 250 basis points since May of last year. It is anticipated that it will increase rates by another 25 basis points in April, bringing them to 6.75%, before taking a break until the end of 2023.
A high preference for home ownership over rental housing was cited by all but one of the 13 analysts who predicted an increase in homeownership over the coming years.
“In India’s economy, buying a property has traditionally been preferred to renting. The pandemic’s uncertainty increased the urge for security and property ownership, “the head of research at CBRE India, Abhinav Joshi.
The chronic lack of affordable housing is the main issue in one of the most populated nations in the world, where millions of people live in utter poverty.
Concerns regarding the long-term viability of the current housing market trend are further raised by a recent rise in unemployment.
Eleven analysts responded to a different question, and all but one predicted that the affordability of buying will decline in the upcoming year. Only one person predicted improvement.
“Amid growing prices, affordability will further worsen in the next quarters. The more affluent buyers will continue to purchase real estate, but this will have an influence on buyers in the mid-range and cheap price ranges “ANAROCK Property Consultants chairman Anuj Puri made this statement.
According to a regional breakdown of the poll results, prices in Bengaluru, Chennai, and Delhi, including the national capital region around those cities, will increase by 5% to 6% this year.
Mumbai’s housing market was anticipated to expand at a slower rate of 3.5%.