House prices in the country have gone up – albeit at a slower pace – if the data collected by the Reserve Bank of India is any indication, it shows that high interest rates have not had much of an impact. experience in the group so far.
The RBI’s All India Home Price Index (HPI) recorded 2.79 percent growth (year on year) at 302 in the third quarter (end December) of 2022-23 as compared to 293.8 when showed a 3.1 percent growth last year despite the increase in interest rates. On a quarter-to-quarter (QoQ) basis, the index rose from 298, an increase of 1.34 percent, from September 2022, according to the latest RBI data. YoY movements in HPI varied widely across cities, ranging from a growth of 7.1 percent (Kochi) to a decline of 9.0 percent (Jaipur), the RBI said. While Lucknow, Kolkata, and Jaipur recorded the QoQ index, it rose for other cities. In Mumbai, the HPI rose to 292.9 from 286 last year, Delhi from 327.7 to 336.8 and Bengaluru from 315.9 to 331.1. Kochi index rose from 310.1 to 332.3.
The RBI’s data is based on trade level information obtained from the registration authorities in ten major cities – Ahmedabad, Bengaluru, Chennai, Delhi, Jaipur, Kanpur, Kochi, Kolkata, Lucknow and Mumbai.
“Although it appeared to be a matter of concern at first when banks started increasing interest rates for housing loans, the increase in demand was witnessed in the last 2-3 quarters since it was opened. a new perspective. Almost in all major cities and their sub-markets, selling in segments like premium, mid-range and affordable, it was picked up,” said Sankey Prasad, Chairman & Managing Director, Colliers India.
The RBI raised the Repo rate by 250 basis points (bps) to 6.50 percent from May 2022 to curb inflation. The cost of loans by banks and financial companies has increased because many loans are now linked to an external rate such as the Repo rate.
“The good feeling and happiness remained ten years after the closing of the 215,000 residential houses that were sold in the country. The same trend is largely expected to continue in 2023 due to low levels of consumer goods, many new releases that meet the needs of urban residents and a positive consumer sentiment in Residential buildings are part of the assets,” said Darshan Govindaraju, Director, Vaishnavi Group.
However, industry analysts expect rates to drop if commodity prices fall below 5 percent in the coming quarter.
“We are of the opinion that the graph of the interest rate is on the top right now and it should start to fall down and reduce to less than 2 percent in the coming months. The affordable and luxury segments will drive continued growth with emerging segments such as senior citizens, education facilities performing well over the next few years,” said Bhavesh Kothari, Founder & CEO, Property First.
According to Prasad, the strong state of our economy despite the global economic situation, the stability of the labor market and the increase in purchasing power are some of the reasons for this. the sale of houses.
“The financial and luxury sector, in particular, remains unaffected by the rise in interest rates as consumers look to invest in properties that give them a better sense of life and offer them better return on investment,” says Govindaraju. In addition, since the high interest rate period lasted for only 3-4 quarters in the last decade against 12-13 quarters more than 2 decades ago Therefore, the long-term growth of the residential sector is expected, giving consumers confidence. to invest in the sector at the beginning, said Kothari.
In the past few years, real estate prices have been on an upward trend, reinforcing the idea that residential properties are a safe and smart investment option, Govindaraju said.