Analysts Predict Housing Market Will Remain Resilient Despite Higher Interest Rates: Report
This trend of the Indian housing market is defying the global trend of falling housing prices as mortgage rates rise and crimp affordability, the report said
Analysts have said that the housing market in India will remain resilient despite rising interest rates and a weak global economic outlook, according to a Reuters poll of property analysts. The poll shows that the Indian housing sector has shown resilience and is emerging from a decade-long downturn due to strong demand.
The news agency conducted a survey from February 16 to March 3 of 13 property market experts. According to the survey, average home prices are forecasted to rise 5.5 per cent this year and 5.0 per cent next year. This trend of the Indian housing market is defying the global trend of falling housing prices as mortgage rates rise and crimp affordability, the report said.
In an effort to combat persistently high inflation, the Reserve Bank of India (RBI) has increased interest rates by a total of 250 basis points since May of last year. It is anticipated that RBI will increase rates by another 25 basis points in April, bringing them to 6.75 per cent, before taking a break until the end of 2023.
A total of 12 out of 13 analysts polled said that homeownership would rise over the next few years, partly due to a strong inclination towards owning rather than renting a home.
Divyesh Shah, associate director at CARE Ratings told Reuters, "After the Covid-19 pandemic, the urge to own a house is higher than ever and thus, the residential segment has witnessed strong demand…While rising inflation and interest rates may impact demand to a certain extent in the near-term, the industry is, however, poised for steady growth in the coming 2-3 years and thus home ownership is likely to increase."
"India has always been an economy where the home purchase is preferred over renting. The uncertainty around the pandemic further amplified the need for home ownership and security," said Abhinav Joshi, head of research at CBRE India. "Amid rising prices, affordability will only worsen in the coming quarters. The financially stable seekers will continue to buy property, but buyers in the affordable and mid-segments would be impacted by this," said Anuj Puri, chairman at Anarock Property Consultants.
In a separate questionnaire, 10 out of 11 analysts said that buying an affordable house over the coming year would worsen. According to a regional breakdown of the poll results, prices in Bengaluru, Chennai, and Delhi, including its surrounding national capital region, will rise between 5 per cent and 6 per cent this year. Mumbai's housing market, meanwhile, was anticipated to expand at a slower rate of 3.5 per cent.
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