Parvathi Shivam | December 2, 2022
Residential realty will grow 8 to 9 percent in FY 2024
The Reserve Bank of India’s (RBI) expected interest rate hike would not impact residential real estate in the coming year as buyers can absorb the impact of high-interest rates ,said industrial experts.
Migration of youth to metros for work and studies have surged after Covid-19 restrictions eased, said Abhimanyu Kasliwal, Assistant Vice-President of Choice Equity Broking. Hence, first-time home buyers are without dependents, and they can afford to buy homes
The economy anticipates a 35-basis point repo rate hike, but residential real estate wouldn’t be trampled by it; instead, it will post an 8 to 9 percent growth, a historic high, said Kasliwal
“It is estimated that over 40 million households will be sold and bought by the middle and upper middle class of India by 2030 even if the price jumps persistently,” he added
According to RBI’s All India Price Index, 3.5 percent annual growth in house prices was reported in the first quarter of the financial year 2023, compared with 2 percent in the same quarter last year.
Equated Monthly Installment (EMI) costs of residential properties in metros had hit a cumulative rise of 70 per cent since RBI started to raise repo rates last May, said Pritesh Seth, Associate Vice President and Institutional Research analyst, real estate division of Motilal Oswal Financial Services.
According to RBI’s All India Price Index, 3.5 percent annual growth in house prices was reported in the first quarter of the financial year 2023, compared with 2 percent in the same quarter last year. Equated Monthly Installment (EMI) costs of residential properties in metros had hit a cumulative rise of 70 per cent since RBI started to raise repo rates last May, said Pritesh Seth, Associate Vice President and Institutional Research analyst, real estate division of Motilal Oswal Financial Services.
But EMIs are not bothering millennials as home loan repayments take longer than seven years, Seth said. EMIs will adjust to the new interest rates by the central bank and probably surge or slump accordingly during this long period, he said.
“Despite the rise in EMI, HDFC Bank is seeing the highest demand for home loans in the bank’s 45-year journey ”, said Mahesh Shah, additional senior general manager at HDFC Bank. This is common across banks.
“Canara Bank is seeing a 20 percent growth in net interest margin and one of the reasons for it is the growth in home loans,” said Jestin Mathew, Branch Manager of Canara bank, Udupi.
Builders are now venturing into Tier-2 cities like Pune, Mysore, Chandigarh, and Amritsar as small towns are rapidly urbanised, said Prashanth Kumar, Real Estate Agent and Senior Sales-Manager of Aadhaar Prop Mart Pvt Limited. The dependents of the migrated workforce remain in their cities and aid the residential demand in Tier-2. The reducing digital divide makes small towns appropriate to stay and work in, he added.