In times of fluctuating economy and increasing interest rates, India’s housing sector has surprised many.
Lately, the Reserve Bank of India (RBI) has put many actions to combat inflation. One such is interest rate hikes. Whenever interest rates are raised, the housing sector always faces a hard time. Surprisingly, that’s not the case this year. The All-India Home Price Index (HPI) reveals a remarkable 4.57% surge in home prices during the fiscal year 2022-23. This trend defies the expected slowdown and showcases the resilience of the housing sector. Let’s dive deeper into the whole case.
Metros Experience Mixed Price Movements:
The HPI data highlights different scenarios for various cities. The IT hub Bengaluru emerges as the front-runner with an astonishing 16.3% surge in home prices. In contrast, Jaipur experienced an unexpected 8.5% contraction, leaving observers puzzled. These divergent trends display the complexity of the market of response.
India’s financial hub, Mumbai, witnesses a steady rise of 4.26% in home prices, defying the prevailing interest rate hikes. Delhi, the bustling capital city, records a robust growth rate of 6.65%, indicating sustained demand despite rising costs. This story of Mumbai and Delhi signals the real estate sector being an investment avenue.
Affordable Housing Sector Faces Challenges:
While the real estate market has come out strong, the affordable housing sector faces certain challenges. The increase in interest rates on home loans has dampened sales in economic housing. However, industry experts are quite optimistic about the future. They expect the government to introduce constructive policy measures to rejuvenate this crucial sector and sustain its growth.
Buyer Sentiment Remains Positive:
It is essential to note that, the rise in home loan interest rates has not weakened the buyer sentiment. People of age 25-37 seek, the housing sector as a value investment in the longer run. Despite the challenges posed by inflation and higher interest rates, the demand for housing continues to surge. This reflects the sentiment and stability of youth of India.
The Road Ahead:
As interest rates typically follow a cyclical pattern, India is anticipated to be nearing the current cycle’s peak. Meaning, the surge in interest rates soon will come to an end. This concept assures stakeholders of a more balanced and sustainable market shortly. However, developers and policymakers must adapt to changing market dynamics and consumer preferences. The journey ahead promises to be exciting, with the potential for further growth and innovation in India’s dynamic housing market.