Residential real estate has stood the test of time as an investment aiming for 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 erosion of wealth and significant returns as the value of the property continues to appreciate over time.
In 2022, home loan interest rates rose following repo rate hikes by RBI. Real estate prices also jumped in all cities. The Reserve Bank of India raised the policy rate by 190 basis points, forcing lenders to raise mortgage rates. However, experts say the rise in mortgage rates has had no impact on demand for residential properties.
“Despite price hikes by developers and the RBI raising the repo rate by 190bps of late, home sales continue to remain strong in major cities as genuine buyers show up to wrap up the deal. agreement,” said Santhosh Kumar, Vice President of Anarock Group. .
Also Read: Two Banks Offering Cheaper Home Loans Than SBI And HDFC This Festive Season
The home sales trend has continued even in the current festive quarter. If you’re considering booking a new home or apartment, here are some trends you should be aware of as interest rates rise:
1. Home ownership becomes a priority after the pandemic
Home ownership has become a top priority during the pandemic, and this trend continues. Home prices have started to rise and buyers are looking to invest in appreciating assets.
2. Mortgage rates remain low
Despite four successive rate hikes by the RBI, interest rates continue to be lower than during the 2008 global financial crisis, when they hit 12% and more.
3. Strong demand for A-level projects
Tier A developers (large and listed) are seeing strong sales despite rising prices due to high interest rates, and they have also increased their new supply to the market.
“As buyer demand is heavily skewed towards large, publicly listed developers, we expect sales to remain strong in the current festive quarter,” Kumar says.
Read also: Interest rates on the rise? Step-by-step guide to getting the cheapest home loan
4. The best time to buy a house is now
Inflation continues to ravage almost every economy, and India is no exception. Therefore, the 50 basis point rise in the RBI at the start of the month was quite expected, especially as no global economy hinted at any moderation.
“Inflation could also pose a risk for monetary policy in December and the RBI could be forced to take action. Therefore, it is better to buy a house now,” says Kumar.
5. Housing affordability has increased
Finally, housing affordability has improved over the past 8 years. It reached one of the best levels of the previous financial year and continues to be quite attractive even today. This is expected to drive end-user demand in key segments – affordable and middle-income.