Housing prices continue to move upward, strengthen key Indian cities’ global rankings
Residential property prices across key Indian cities including Mumbai, Delhi-National Capital Region (NCR) and Bangalore have continued to move upward led by market sentiment, adequate affordability, still lower interest rates compared to 2019 and a relatively stable economy and business environment compared to several developed economies.
These Indian cities have registered an increase in average annual prices during the third quarter while the pace of average price growth in global prime residential markets has started to slow.
Mumbai, the country’s most expensive property market, recorded a 4.8% on-year rise in average prices during this period pushing the city to 22nd spot globally from 39th position a year ago, showed the Knight Frank prime global cities index.
While the country’s commercial capital witnessed the most prominent rise in the position, Bangalore and New Delhi too witnessed an upward movement in index ranking them at 27th and 36th rank from 41st and 38th spot a year ago, respectively. Prices in Bangalore and New Delhi rose 3.3% and 1.2%, respectively during the 12-month period.
“India continues to distinguish itself as one of the most resilient large economies of the world and market sentiments remain strong. While increasing mortgage rates have weighed down prime residential markets globally, the Indian prime residential market has been relatively strong and should be able to sustain the momentum till the end of 2022 ,” said Shishir Baijal, CMD, Knight Frank India.
Dubai topped the ranking recording the fastest rise in prime prices with 88.8% increase during a 12-month change while New Zealand’s Wellington was the weakest performing market with a decline of 18%.
“India is emerging as a bright spot among global economies. Growth in housing prices is being supported well by the homebuyers as indicated by the sales activity not only in metro cities but also in tier II locations. Most of this price hike is led by cost-push and several developers are still being accommodative,” said Jaxay Shah, CMD, Savvy Group.
The prime global cities index recorded an average annual growth of 7.5% during the quarter, down from a peak of 10% in the first quarter of 2022. However, at 7.5%, annual growth still sits above the index’s average five-year growth rate of 4.4%. A total six cities registered a double-digit price growth whereas 19 cities witnessed a decline in prime residential prices between June and September 2022.
While the rising interest rates have impacted the activity, festive offers by real estate developers including absorption of higher interest rates on behalf of homebuyers has supported the pace of deal conclusion for now.
“We do not see home loan interest rates turning out to be a major dampener until it reaches the double-digit number,” Godrej Properties’ executive chairman Pirojsha Godrej told ET in a recent interaction. The company has been able to achieve price increases in the range of 5-10% across its projects in the last 6-9 months and the homebuyers have responded well to that as indicated by the bookings.
The performance of the real estate sector including residential and office segments has surpassed the pre-pandemic levels and has scaled a new record high during the July-September quarter owing to sustained resurgence in demand despite the rising interest rates.
During the third quarter, the number of home sales has surpassed the peak for the last ten years across the top eight Indian property markets. Across these leading cities, residential sales grew 15% from a year ago to 73,691 apartments. This was also the third consecutive quarter of consistent on-year growth in prices across all markets.
In a bid to tame inflation and provide support to the currency, the Reserve Bank of India has been increasing the repo rate since May. The cumulative hike in repo rate since then now stands at 190 basis points and housing loan rates have already moved upward of 8%.
On the downside risk, the affordability synergy which was prevailing six months back has been facing some challenges. The home loan interest rate in the last six months has gone up by around 130-140 bps. According to experts, this coupled with the upward pressure on property prices may play out to be a sentiment disruptor for homebuyers albeit on a temporary basis.
Read more at: https://economictimes.indiatimes.com/industry/services/property-/-cstruction/housing-prices-continue-to-move-upward-strengthen-key-indian-cities-global-rankings/articleshow/95848382.cms