Analysts predict a potential rate cut later in the year, further boosting housing demand across segments.
Mumbai: The Reserve Bank of India’s (RBI) decision to maintain the repo rate at 6.5% for the seventh straight review mee- ting and expansive economic growth outlook, is expected to support stable growth momentum in the housing property market.
A sustained post-Covid surge in sales of mid-range and luxury residential properties, coupled with a prudent stance towards the interest rate sensitive affordable and low-income housing sectors is likely to persist.
Industry experts expect the central bank to cut rates later this year, further boosting housing demand across segments.
“The central bank maintains the repo rate at 6.5% continuing a hawkish stance to keep inflation under check. However, with repo rates being an industry agnostic subject, we hope to see lower interest rates later this year which will provide an impetus to not just real estate and housing demand but across industries compounding sectoral and economic growth,” said Boman Irani, president, CREDAI.
According to him, with the economy re- cording 8.4% growth in the December qu- arter, a rate cut in the future will help sustain this momentum or even accelerate it. Irani expects the repo rate to be reduced in the second quarter of 2024-25 in the post- election phase.
“The positive financial environment bolstered by supportive government policies
and optimistic consumer sentiment has been supporting the housing sales momentum across key markets and segments. We fore- see continuation of this demand with hopes of a reduction in the repo rate in the future,” said Prashant Sharma, president, NARED CO Maharashtra.
Housing sales volume in the primary market have grown at an annualised rate of 29% since 2020, reaching a 10-year high in 2023. The residential property market has continued the growth momentum in the first quarter of 2024 with sales of more than 86,345 units, up 9% from a year ago despite higher mortgage rates and an uptrend in prices, showed data from Knight Frank India.
Consistent increase in demand has spur- red a rapid pace of residential development, resulting in the number of units launched surpassing sales figures for the last six quarters.
The current inventory level of 5.9 quarters compared to 6.7 quarters a year earlier underscores the improvement in the Indian housing property market.
Source – Economic times
