Residential real estate has withstood the test of time as an investment aimed at decent returns. Buying a residential property not only gives home ownership but also gives stability to one’s investment portfolio. The physical nature of the asset ensures limited wealth erosion and significant returns as the value of the property keeps appreciating with time.
In 2022, home loan interest rates have gone up following repo rate hikes by RBI. Property prices have also jumped across cities. The Reserve Bank of India has increased the key rate by 190 bps, forcing lenders to hike home loan rates. However, experts say that the rising home loan rates have not impacted residential property demand.
“Despite price rise by developers and 190 bps repo rate hike by the RBI in recent times, housing sales continue to remain strong across the top cities as genuine buyers are coming forward to seal the deal,” says Santhosh Kumar, Vice Chairman, Anarock Group.
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The housing sales trend has continued even in the ongoing festive quarter. If you are planning to book a new house or flat, here are some top trends you should know amid rising interest rates:
1. Homeownership becomes priority post-pandemic
Homeownership has become a compelling priority during the pandemic, and this trend continues. Home prices have begun to rise and buyers are looking at investing in appreciating assets.
2. Home loan rates continue to remain lower
Despite four successive rate hikes by the RBI, interest rates continue to be lower than during the global financial crisis of 2008, when they went as high as 12% and above.
3. High demand for Grade A projects
Grade A (large and listed) developers are reporting high sales despite a price rise due to high interest rates, and they have also increased their new supply into the market.
“Given that buyer demand is heavily skewed towards large and listed developers, we expect sales to remain good in the ongoing festive quarter,” says Kumar.
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4. Best time to buy a house is now
Inflation continues to ravage almost all economies, and India is no exception. Hence, the 50 Bps hike by the RBI early this month was quite expected, especially since no global economy has hinted towards any kind of moderation.
“Inflation could further pose a risk in the monetary policy in December as well and the RBI may be forced to take some action. Hence, it is best to buy a home now,” says Kumar.
5. Housing affordability has increased
Lastly, housing affordability has improved over the last 8 years. It reached among the best levels last fiscal year and continues to be fairly attractive even today. This should boost end-user demand in key segments – affordable and mid-income.