India’s property industry and developers will again be turning outside – to Indian ex-pats – to maintain the robust rebound demand for houses witnessed across major cities since last year. Because, with a second interest rate rise in a row, financing a house purchase has become much more expensive for domestic purchasers, said Gulf News.
In India, the basic interest rate is 4.90 per cent, while the mortgage rate ranges from 6.50 per cent to 7.50 per cent. According to industry observers, the increase in interest rates may push property demand into the red zone.’
“Any further rises will have a significant impact on house sales,” said Anuj Puri, Chairman of the Anarock Group, a real estate consulting firm. “The rate hike will almost certainly raise house loan interest rates, which had already begun to climb following last month’s surprise monetary policy move” (when the RBI effected a 0.40 per cent increase).
This is why developers hope to hire Indian ex-pats to fill any demand gaps that may arise in the following months. While NRIs were active players in the previous 18 months, local purchasers were at the forefront of clearing unsold property stock, aided by government pronouncements of lower stamp duty and easier access to home finance in the aftermath of the Covid economic shock.
The rupee’s depreciation will be crucial:
Recently, the Indian rupee has weakened, falling below 21 to the dirham for the first time on May 9. According to market analysts, the number 22 will be reached sooner than previously.
Whether buying a home or property in India or taking out a mortgage to fund it, foreigners benefit from the rupee’s devaluation.
Potential purchasers should wait until the forthcoming festival season to look at new off-plan launches, according to Dr Niranjan Hiranandani,
Potential purchasers should wait until the forthcoming festival season to look at new off-plan launches, according to Dr Niranjan Hiranandani, Vice-Chairperson of the real estate grouping NAREDCO and Managing Director of the Mumbai-based Hiranandani Group.
“Low borrowing rates, stamp duty exemptions, and developer incentives fueled strong demand for houses during Covid,” he added. “This pushed the home market to clear up its massive unsold inventory backlog. Developers are presently preparing for future releases.
