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Buying Home To Get Costlier: Property Prices In Major Cities To See Biggest Rise In 5 years, Rents To Go Up Too
The house prices in India's two most populous cities of Mumbai and Delhi, including its surrounding National Capital Region, will rise between 4% and 5% this year and next.
New Delhi: Property prices in India are expected to see a rise by 7.5% this year. According to Reuters poll property analysts, this will be the fastest growth in 5 years. Average house prices were forecast to rise 6% next year and in 2024. The poll of 13 property analysts were held during May 11-27. In a March poll, the analysts had expected, an increase of 5.0% for this year.
The latest Reuters poll also showed house prices in India’s two most populous cities of Mumbai and Delhi, including its surrounding National Capital Region, will rise between 4% and 5% this year and next. However, house prices in Bengaluru and Chennai, where analysts said homes were fairly valued, were forecast to rise 5.5%-6.5% over the course of the next two years.
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The forecasts come despite expectations for sharply higher interest rates after the Reserve Bank of India earlier this month surprised markets with a 40 basis point repo rate hike to 4.40% and hinted more are coming soon.
Improving housing demand and increase in building material cost are some of the key factors for housing price rise, according to analysts. Analysts however warned that higher interest rates could weigh on affordability, especially for first-time buyers.
Rents in major Indian cities to go up
According to the report, home rents too are expected to become more expensive as expensive house prices have led many would-be first-time homeowners to rent instead.
Director, JLL Research Rohan Sharma said, “given that more rate hikes are coming, “the window of opportunity for homebuyers to enter the market at the current affordable (levels) will close over the next 2-3 quarters.”
Vivek Rathi, director of research at Knight Frank, reckons for every one percentage point increase on a home loan interest rate, affordability is reduced by more than 7%.
A report in the economictimes.com said that rentals in major Indian coities have gone up by 10-20% as companies have started pushing hybrid work arrangements and schools have opened up in most of the cities.
Since January, the rental housing market in big cities has started to get back on its feet. This is because companies are starting to use hybrid work arrangements and schools are opening in big cities.
“The residential rental market has, however, shown a steady increase in demand over the last two quarters as work from home culture is returning to near normal. The real estate industry witnessed a sharp rise in sales and is now showing amazing signs of recovery in the rental segment too,” the report in ET quoted Samir Arora, president, National Association of Realtors India as saying.
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