Housing values or property are anticipated to rise when interest rates are raised by central banks around the world, including the RBI. 

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Home purchasers have differing opinions about value appreciation, despite the near-unanimity among sector stakeholders that housing prices will only raise in 2022.

According to the results of a two-week survey taken by the online real estate firm between June 20 and July 5, 2022, just over 46% of respondents believe that home values will rise. In contrast, 42% of participants believe that prices will fall in 2022, while 20% of voters believe that prices will remain unchanged.

Because respondents had the option of choosing more than one option as their vote decision, the numbers show an oddity. 7,565 votes were cast in the poll by a total of 6,907 respondents.

Lower or static prices

Some people would think that home buyers’ votes for lower or static prices represent wishful thinking, and evidence from numerous sources would support this claim.

Global central banks, including the Reserve Bank of India (RBI), are raising benchmark lending rates amid geopolitical concerns that are causing persistent inflationary pressure. As a result, the RBI raised its benchmark repo rate by 90 basis points twice in a single month, prompting interest rate increases among India’s commercial banks.  Leading banks in India have started to charge above 8% interest on home loans as of mid-June 2022, after the banking regulator raised the benchmark lending rate to 4.90% from sub-7% interest when the repo rate was stagnating at 4%.

The rising adjustment of interest rates on loans would raise the entire cost of purchasing real estate for India’s expanding middle class, as housing financing is used to complete the majority of home purchases in this market. Additionally, it would compel developers to burden homebuyers with higher credit costs.

“Input costs were already high due to geopolitical strife, and this rate increase (of 50 basis points on June 8, 2022) will only damper the spirit of the entire real estate value chain. The cost of borrowing would be affected, which will lead to unwelcome rate increases across the board

Prices have already started to rise.

According to a recent research by the real estate company PropTiger.com, typical property values are now rising. According to data the company has access to; the average price of new and available properties grew between 5 and 9 percent last year in India’s biggest property markets.

Even while the numbers may unmistakably point to price growth, the Housing.com News poll provides insight into the attitudes of prospective home buyers. Following the Corona virus outbreak, a surge in demand in India’s home market is mostly being attributed to an upbeat buyer mentality. Despite a dire employment market situation, consumers kept choosing residential real estate as home affordability in the nation peaked. Any ding in the affordability element could be harmful to this beloved and highly wanted customer emotion, having a negative effect on the second-largest employer in the nation.

Some in the sector believe that despite the price increase. The strong demand for residential real estate will continue to expand despite the doubters’ contrary opinions.

After the RBI announced the repo rate hike on June 8, 2022, “We feel that desire for owning a home and solid salary growth will continue to boost the housing industry.”

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