The Indian real estate market saw a notable rise in home sales in September, fueled by declining mortgage rates. However, despite higher demand, housing prices remain stubbornly high, creating affordability concerns for buyers.
Lower Mortgage Rates Drive Sales Growth
Banks and financial institutions have reduced home loan interest rates by 20-50 basis points, thanks to the Reserve Bank of India (RBI) maintaining a stable repo rate. This has made home loans slightly more affordable, encouraging more buyers to enter the market.
Recent data from real estate consultancies shows a 12-18% surge in residential sales across key markets like Mumbai, Delhi-NCR, Bengaluru, and Hyderabad. Developers report stronger demand in mid-range and affordable housing, especially for ready-to-move-in properties exempt from GST.
“Lower interest rates have revived buyer confidence,” says Ramesh Nair, CEO of a top realty consultancy. “Many hesitant buyers are now committing, particularly in no-GST projects.”
Why Are Home Prices Still High?
While sales are up, property prices haven’t softened—in fact, some premium markets saw 2-5% price hikes in Q3 2023. Experts cite rising construction costs, limited new supply in prime areas, and steady demand from affluent buyers as key reasons.
“Developers won’t cut prices because demand is strong,” explains Anuj Puri, Chairman of a real estate advisory firm. “Higher land, labor, and material costs are keeping prices firm.”
Affordability Challenges Persist
Despite lower mortgage rates, many first-time buyers struggle with high property prices. The average home loan size has increased, pushing buyers toward smaller units or peripheral locations.
“The affordability gap remains wide,” notes a Mumbai-based analyst. “Even with cheaper loans, total ownership costs are steep in major cities.”
What’s Next for India’s Housing Market?
If mortgage rates stay low, sales may continue rising during the festive season (October-December). However, a price correction is unlikely unless supply surges or demand cools.
With global inflation risks, the RBI could hike rates later this year, potentially reversing current trends. Buyers are advised to:
– Lock in low loan rates while available
– Watch for developer discounts in festive deals
– Explore affordable housing subsidies
Key Takeaway
Lower interest rates have boosted September home sales, but high prices keep affordability out of reach for many. The market needs either price corrections or higher incomes to achieve sustainable growth.
Will developers hold prices steady, or will festive offers bring relief? Follow us for the latest real estate trends.
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