Successfully navigating buying your own house in a price rise regime

Half-way in to 2022, it’s been a little more than two years since WHO declared Covid-19 a pandemic. Barring a few geographies still coming to terms with the less lethal strain of Omicron, the pandemic is seemingly close to end.

One of the key phenomena to emerge out of the pandemic is that thanks to the forced sequestration and the ensuing adverse financial impact, the consumer behaviour has changed traversing all aspects of their life stages.

The real estate sector is no exception to this change customer behaviour. The mandatory isolation coupled with WFH and online schooling experience has prompted many people who were earlier sitting on the fence when it came to their home buying decision are now seriously contemplating making the switch. This has led to a marked increase in demand for residential properties around the country as is evident from the numbers. Furthermore, there has been a marked change in the behaviour of the potential home buyers. Influenced by the time spent at home during the pandemic related lockdowns, there is a conspicuous predilection for holistic yet spacious homes. The home buyer has even shown willingness to shift away from the city centre to buy a home haven of their choice.

This recalibration of home buyer preferences has led to a demand in residential properties around the country. According to ANAROCK, one of India’s leading independent real estate services company with a presence across India and the Middle East, in a study which evaluates Q1 2022 performance of the housing real estate sector reports that this quarter was the best quarter since 2015 for the industry. The study which appraises sales in seven major cities in India as a barometer of the Indian real estate sector reveals that a record 99,550 units were sold in Q1 2022 all over the country which translates in to a q-on-q growth of 10 % and a whopping 71% y-on-y rise. The y-on-y growth for top-3 cities of MMR, NCR and Pune was 43%, 114% and 33% respectively although NCR was on a much lower base.

From a new launch perspective, the top 7-cities saw a rise of 43% y-on-y to 89,000 unit in Q1 2022 from 62,130 units in Q1 2021 and a q-on-q growth of 21%. NCR saw a negative growth of 27%, whereas MMR saw a growth of 27% on a sequential q-on-q basis. Pune which constituted 17% of all the launches saw a 34% growth. From an inventory standpoint, MMR and NCR are the top two amongst the 7-cities under consideration with share of 28% and 24% respectively. Both these two cities have seen a q-on-q decline in their inventory levels of 3% and 6% and 9% and 10% on a y-on-y basis respectively.

Going forward for the rest of the 2022, basis the above data experts anticipate that demand from potential new buyers will continue to propel the sales and new launches especially in the cities of Pune, MMR, Hyderabad, NCR and Bangalore. The home prices will continue to be driven by increasing demand and rising input costs.

Like increasing demand fuelling the home prices, interest rates from Q2 2022 will also come in to play in further increasing the costs of a new house. RBI hiked the repo rate by 50 basis points (100 basis points equals one per cent) in meeting of its Monetary Policy Committee on June 8, 2022. This hike came on the back of surprise hike in previous month of May. Prompted by RBI, the leading mortgage lenders in the country have hiked their housing loan rates. This means that borrowers will have to either pay a higher EMI or increase the tenure of their loans. However, this is still lower than the pre-Covid rates from the leading home loan lender. According to economists tracking the Indian economy, the RBI is likely to continue to its belligerent stance of sucking out liquidity in the system and keep increasing the interest rates on a periodic basis to keep inflation in check. In a clear indication that the high interest rates regime is here to stay for some time, the RBI Governor has called prospects for higher rates “a no brainer” on the backdrop of high inflation and prevailing geo-political uncertainty.

In this situation, the home buyer is well advised to buy the dream house now before the interest rates peak. In order to help consumers achieve their dream of owning a home, several developers have come forth with initiatives that will help mitigate the effects of interest rate and price hikes. For instance, Mumbai based Lodha developers https://www.lodhagroup.in/homeloan/?utm_source=ht-brm-24-jun&utm_medium=ht-brm-24-jun&utm_campaign=ht-brm-24-jun have come up with an initiative of locking interest rate at 6.99% till 2024. Going with a Grade A developer will ensure you have a seamless home buying experience and be assured of quality construction and timely delivery.

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