Residential property prices have increased by up to
10% in many major cities according to the latest data from the National
Housing Bank.
The big positive that can be drawn from the current scenario is that the government recognises that a boost in the real estate market will help the weakening economy but this can only happen if construction costs are brought down and people are encouraged to buy their own homes. Banks and finance companies are still wary of financing the real estate sector.
A report from Cushman & Wakefield states that
across the whole of India some 11.8 million units/homes will be needed
by 2016. The figures are based on past trends for population and household
growth and the income classification for households.
But there is a grave problem that lies in the middle of realising a well funded infrastructure for such residential projects and that is the hike in interest rates.
Rising interest rates in India are having an impact on the real estate market and are proving to be a deterrent to the sector, according to the Royal Institution of Chartered Surveyors (RICS).
There has been robust economic growth but that has created challengers for the property market, developers and builders. Political instability and indecision, allegations of corruption, issues relating to the environment and land acquisition, regulatory delays and inefficiencies have all negatively impacted on investment demand.
Surging interest rates in the country have also been a tremendous cause of concern. With several rate revisions having already taken place in the last year in order to dampen growing price pressures, RICS expects that a further interest rate hike is unlikely, at least in the near future.
Consumers too have been impacted by the steady hike in interest rates. With cost of borrowing becoming dearer on one hand and price escalations on the other, consumer sentiment has been adversely affected and the uptake in housing stock has seen a slowdown, resulting in over supply in some markets. Additionally, with inflation high and rising, real interest rates are extremely accommodative and have also started to exert upward pressure on commercial property prices.
Retail property, on the other hand might see an uptake with about 50% FDI allocation from last year. However, given the lack of political and economic consensus on the decision, international retailers may play the wait and watch game, prior to setting up business in the country.
Related Posts ;
Current trends in Indian Real Estate
Noida buyers want banks to waive interest
Tags : rising crime , rising interst rates, current real estate scenario, Cosmic Structures, Cosmic Projects
The big positive that can be drawn from the current scenario is that the government recognises that a boost in the real estate market will help the weakening economy but this can only happen if construction costs are brought down and people are encouraged to buy their own homes. Banks and finance companies are still wary of financing the real estate sector.
But there is a grave problem that lies in the middle of realising a well funded infrastructure for such residential projects and that is the hike in interest rates.
Rising interest rates in India are having an impact on the real estate market and are proving to be a deterrent to the sector, according to the Royal Institution of Chartered Surveyors (RICS).
There has been robust economic growth but that has created challengers for the property market, developers and builders. Political instability and indecision, allegations of corruption, issues relating to the environment and land acquisition, regulatory delays and inefficiencies have all negatively impacted on investment demand.
Surging interest rates in the country have also been a tremendous cause of concern. With several rate revisions having already taken place in the last year in order to dampen growing price pressures, RICS expects that a further interest rate hike is unlikely, at least in the near future.
Consumers too have been impacted by the steady hike in interest rates. With cost of borrowing becoming dearer on one hand and price escalations on the other, consumer sentiment has been adversely affected and the uptake in housing stock has seen a slowdown, resulting in over supply in some markets. Additionally, with inflation high and rising, real interest rates are extremely accommodative and have also started to exert upward pressure on commercial property prices.
Retail property, on the other hand might see an uptake with about 50% FDI allocation from last year. However, given the lack of political and economic consensus on the decision, international retailers may play the wait and watch game, prior to setting up business in the country.
Related Posts ;
Current trends in Indian Real Estate
Noida buyers want banks to waive interest
Tags : rising crime , rising interst rates, current real estate scenario, Cosmic Structures, Cosmic Projects
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