The housing industry has been increasing the price of flats step by step since the end of last year due to the high price of raw materials. In addition, the Reserve Bank of India (RBI) has recently hiked interest rates in two phases to curb inflation, raising interest rates on home loans and the cost of monthly installments. The impact of these two is likely to hit the flat-home market in the short term, according to a recent survey by various advisory firms. According to Knight Frank India, the purchasing power index of flats declined in January-June this year. And Anarock claims that sales in April-June in seven cities fell by about 15% compared to January-March.
The housing industry has claimed that the scope of work from home is growing or creating overall uncertainty, so there is a need to ensure a permanent address for all. As a result, sales may not be as strong. But those hopes were not fulfilled. On the other hand, the RBI has raised interest rates by 90 basis points in two phases to curb inflation. As a result, the interest on the home loan has also increased, increasing the pressure on the buyer. According to Anuj Puri, chairman of Anarock, these two factors pushed the overall cost of buying flats and pushed sales. Shishir Baijal, CMD of Knight Frank, says the ability to buy flats in big cities has fallen by an average of 200-300 basis points due to rising interest rates on home loans.
According to Anarock’s estimates, sales in seven cities, including Kolkata, increased three-and-a-half times in April-June compared to the same period in 2021. But sales last year were already low for the second wave of Corona. On the contrary, compared to the January-March quarter of this year, the sales in those cities have decreased by 15%. In Calcutta, it has decreased by twenty percent. According to them, flat-house prices have risen by 2% -3% in the last quarter. Annual growth is 4 percent -6%.
Knight Frankcounts in terms of purchasing power index of flat-house in terms of cost of installments, subject to income. They say that in Kolkata, Mumbai, Delhi, and adjoining areas of the capital, Bangalore, Pune, Chennai, Hyderabad, and Ahmedabad – these eight cities have seen higher costs in January-June this year than in 2021. In Kolkata, it increased from 25% last year to 27%. In 2020 it was 30%. The lowest cost is in Ahmedabad, at 22%. And the cost of installments is highest in Mumbai as compared to income, 56%.
Shishir, however, claims that the price of flats is still affordable. The industry hopes that the demand for a home will have a positive impact on the market. Besides, the demand will continue in the coming days with the help of financial growth.
At a glance
- The price of flats has gone up due to high raw material prices. About 2% -3% in the last quarter.
- From January-March, the purchasing power index decreased in 8 big cities in the country.