Despite the Reserve Bank of India starting its most aggressive tightening cycle in a decade, the optimistic view for India's housing market has not altered in the previous three months, according to a Reuters survey of real estate sector analysts.
The RBI increased the repo rate during the previous four months from a pandemic-era record low of 4.00% to 5.40%, relatively late compared to other central banks. By the end of March, it is predicted to have increased by another 60 basis points, raising borrowing rates for potential homeowners.
But the cost is the biggest issue in a nation where roughly a fourth of the people makes less than 15,000 rupees a month.
According to a survey of 15 real estate industry specialists conducted between August 16 and September 2, even with interest rates slightly above pre-pandemic levels, a shortage of supply, and growing input costs, house prices were still predicted to increase by 7.5% this year and 6.0% the following year.
These remained constant from the May survey and exceeded forecasts for this year's and the following year's consumer inflation of 6.5% and 5.2%, respectively.
The housing market prognosis for a nation with a population of more than 1.3 billion people is unusual, considering that other significant countries surveyed by Reuters expect home prices to decline or expand at a considerably slower rate in 2019. As a result, many would-be homeowners will continue to be unable to afford a home.
According to Rohan Sharma, director of JLL Research, "input costs and interest payments are being passed on to the purchasers by developers, and prices have already gone northward throughout major cities, which has restricted the window for affordability."
As a result of the pandemic-induced desire for home ownership, demand has mainly remained stable over the past three months.
The "Silicon Valley" of India, Bengaluru, will outperform other big cities with a property price rise of 6.0% for 2022 and 7.0% for the following two years, according to a geographical analysis of the most recent Reuters poll results. These predictions are generally in line with those in the May survey.
In Mumbai, house price growth was predicted to be 5.8% in 2024 and 5.0% this year and the next.
This year and the next, Delhi property prices, including those in the National Capital Region around it, will increase between 4% and 5.5%, roughly at the same rate as Chennai, a Southern coastal city.
When asked to rate the worth of national home prices on a scale of 1 to 10, with ten being the most costly, the median answer was 5, which was in line with May's prediction.
Analysts designated Mumbai and Delhi as the most overpriced cities in India, assigning their real estate a combined grade of 7.