These rate hikes will have an impact on the real estate market and home-buyers sentiments.
“A 1% increase in home loan interest rate reduces house purchase affordability by 7.4%. We are on a landscape of rising interest rate and increasing property price, which will put pressure on affordability if they move beyond income growth. At the current juncture, strong income growth is supportive of homebuyer affordability. Hence, comfortable affordability level coupled with the renewed enthusiasm for home ownership shall help maintain the strong housing sales momentum in the near term," said Vivek Rathi, Director - Research, Knight Frank India.
According to a Reuters poll of property analysts, property prices in India are expected to increase 7.5% on a pan-India basis this year. The poll of 13 property analysts were held during May11-27. In a March poll, the analysts had expected, an increase of 5.0% for this year.
According to the Reuters poll, prices in Mumbai and Delhi, including its surrounding National Capital Region, is expected to rise between 4% and 5% this year and next. Prices in Bengaluru and Chennai, are forecast to rise 5.5%-6.5% over the course of the next two years.
