Home prices in India are projected to witness a 7 per cent surge this year and the next. This uptick is primarily attributed to the purchase of luxury properties. The supply of affordable homes is expected to fall short of rising demand.
The Reserve Bank of India implemented interest rate hikes totaling 2.5 percentage points between May 2022 and February 2023. But the housing market in Asia's third-largest economy has remained resilient, as per a report by Reuters.
However, the skyrocketing home prices might increase the difficulties faced by vulnerable segments of the economy. According to a survey conducted by the news agency, between February 16 and March 1, median predictions suggest that average home prices in India are expected to increase by 7 per cent both this year and the following, remaining relatively stable compared to the November forecasts of 6.8 per cent and 7.5 per cent, respectively.
Even after RBI's efforts to control inflation through increased rates, home prices took a different road and surged. This increase was largely driven by a post-pandemic buying frenzy in the high-income group.
However, the central bank will likely reduce interest rates this year, which should enhance affordability. Among twelve strategists surveyed, eight expressed optimism that affordability for first-time homebuyers will improve in the upcoming year, while four indicated it would deteriorate.
This year, the survey forecasts a 6 per cent rise in home prices in Mumbai, 5 per cent in Delhi, and 9 per cent in Bengaluru. These states are a part of the larger urban segments
