Is buying a home amidst rising prices a right decision?
Source: Zee News https://bit.ly/3RM56xC
The advent of COVID-19 and the subsequent lockdown brought the Indian economy to a standstill, with real estate bearing the brunt of the impact. The realty sector in India had taken a massive hit which was clearly visible in the unsold inventory list during the said period.
However, along with the turnaround in the economy, the real estate sector in the country too seems to be bouncing back and has been on an upswing since the second half of the previous year.
As the realty sector is highly dependent on bank financing for both builders and customers, it was anticipated that rising rates will impact post-pandemic recovery and slow down sales.
We had a candid chat with a social media influencer in the situation covering the real estate.
Notwithstanding the RBI’s recent decision to hike the repo rate, which will consequently make home loans more expensive, realty experts feel that the demand for houses will not witness a massive impact, influencer Neha Garg has opined.
Interest rates have a profound effect on the value of residential properties; it determines the cost of a loan. They force banks and other lenders to charge a higher interest rate on the principal amount in loans, including home loans.
However, this time, the scene is different. This rate hike has a moderate impact on residential property sales. The Real estate market moves in a cycle. After facing a long downfall due to Demonetization, GST and Covid, its long-term upward cycle has now started, the influencer commented.
According to Neha some of the reasons behind this high demand are:
- Millennials are buying their first home. There’s a rise in preference for housing properties among millennials.
- Many people believe that real estate is a safer investment for them.
- Due to the fall in Rupee’s value, the buying power of NRIs has increased. NRIs are buying houses in their hometown in India.
- A majority of the working professionals return to offices, it will positively impact the demand for the residential segment.
- Most of the rating agencies have estimated the growth of India in the range of 8-9%. Due to this healthy economic growth, there will be a rise in jobs which will further result in high housing demand.
So, we can say that 2022 is going to be the year of residential real estate, driven by the millennial homebuyers who are investing in real estate more than ever before.