Union Finance Minister P Chidambaram has indicated that the unsettling trend of double-digit inflation is expected to persist for a few more weeks. Both the Central Government and the Reserve Bank of India (RBI) stand prepared to take additional measures to tackle soaring prices, especially given the adverse reactions in the markets to two pressing issues—high inflation and increased oil prices.
However, one particular asset class appears to be resistant to inflationary pressures: real estate. Signs are beginning to emerge of a softening market, particularly as banks increase interest rates, making loans more challenging to secure.
The probability of higher home loan rates suggests that now could still be an opportune moment for purchasing property. Industry experts advocate shifting focus towards Tier II and Tier III cities as a viable strategy.
With the RBI increasing the repo rate to 8.5%, a decrease in property prices can be anticipated. Projections indicate that property prices may slide further by 5-10% in the upcoming quarter. "If the sentiment remains the same, and mortgage rates escalate, demand and prices will likely be affected, leading to noticeable declines," stated Anshuman Magazine, Chairman & Managing Director at CB Richard Ellis.
Consequently, a drop in buyer interest may compel property developers to reduce prices to stimulate demand. In particular, numerous builders in Mumbai are currently offering significant discounts to entice prospective buyers.
"If you are fortunate enough to be in a strategic location, possess sufficient funds, and choose a reliable developer, then this is the moment to make a purchase and not postpone your decision," advised BP Dhaka, COO of Parsvnath Developers.
Recently, residential property values have reported declines of 15-20% nationwide in recent months. While it may be an advantageous time for consumers to invest in property, the burden of servicing a loan could become increasingly daunting.
Thus, making an informed decision holds potential to secure a favorable real estate deal amid price corrections occurring in various regions across the country. Moreover, options to relocate to Tier II and Tier III cities should also be explored, as experts predict those property prices will likely diminish even more compared to metropolitan areas.