Rising real estate prices due to the recovery in demand and high interest rates; What should homebuyers do?

As the real estate sector in India is enjoying a recovery after a long business interruption due to the pandemic-induced lockdown and rising interest rates, house prices in the country are also seeing a rise. Rates in India’s top five cities have increased by up to 21% in some areas. Experts, however, said that since interest rates are expected to rise further in the near term, it’s time for buyers to avail themselves of a mortgage.

According to a joint report by Credai, Colliers and Liases Foras, “Residential prices, which have exceeded pre-pandemic levels, have been on an upward trend driven by growing demand amid rising construction material prices. construction. Delhi-NCR saw the highest increase in residential prices at 10% YoY, followed by Ahmedabad and Hyderabad with an increase of 9% and 8% YoY, respectively. »

The report, titled “Housing Price-Tracker Report 2022”, states that Delhi-NCR region saw the highest price increase in India at 10% with an average carpet price of Rs 7,434 per square foot in the second quarter. 2022. “Golf Course Road saw the highest price increase of 21% YoY, followed by Noida Expressway.”

Grant Thornton Bharat partner Sumeet Abrol said news18.com“Despite the surge in prices, there is increased demand and positive feelings in the market to buy the new home. This is further driven by the upcoming holiday season which creates a positive atmosphere for owning a home.

He added that if someone wants to buy a property under construction, it is important to understand the developer’s commitment to timeliness because in most cases the developer ends up delivering houses after several years, while the requirements and the purchasing capabilities of the buyer are modified. during these years of waiting.

Lenders have also raised their interest rates on loans even as the RBI’s monetary policy committee raises the key repo rate in the country to control inflation. The central bank’s rate-setting committee raised the repo rate by 140 basis points in three straight hikes.

Atul Monga, CEO and Co-Founder of BASIC Home Loan, said, “Home loan rates have been rising gradually, which may indicate that home values ​​will also be on an upward trajectory. It’s always best to buy a home when market conditions are in your favour.

He added that in the current economic environment, with mortgage rates set to rise further as interest rates climb, now is probably the “best time” to qualify for a mortgage.

On the industry outlook, Anshuman Magazine, Chief Executive Officer (India, Southeast Asia, Middle East and Africa) of CBRE, said, “The residential sector is poised for a strong 2022 as sales and new launches could show a strong performance after exhibiting resilience last year.Real estate prices rose in most micro-markets and segments due to record sales and developers’ decision to pass on the rising construction costs on buyers. We expect the mid-range and affordable segments to continue to drive sales.”

The magazine added that while continued inflation and the rising cost of finance could impact stakeholder sentiment in the short term, the overall health of the sector should remain strong due to positive sentiment from homebuyers.

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Leslie M. Gill