No impact of rising repo rates on home sales

The recent surge in house prices due to rising commodity costs and the Reserve’s decision to raise the repo rate twice in the quarter had little impact on residential sales , which continue to see monthly growth, according to major real estate developers and brokerage firms.

Experts said that after the outbreak of the Covid-19 pandemic, the perception of real estate investing has changed, particularly in light of hybrid working models or work-from-home opportunities, and that marginal changes may not impact purchasing decisions.

“Despite the increase in the repo rate, affordability is at an all time high. The real estate sector has been down for a long time, but now the cycle has reversed. We believe the positive sentiment will continue as all segments are doing well,” said Mohit Malhotra, Managing Director,

.

According to , despite a strong recovery in demand over the past two years, prices have remained broadly stable this time around, limiting the impact on affordability.

“We continue to see a monthly increase in sales volume, prices and registration. The recent rise in interest rates has not deterred the end buyer. This can be attributed to Covid-19. This has amplified the importance of buying a home, which provides financial and emotional security,” said Sanjay Dutt, Managing Director, Tata Realty & Infrastructure.

Lower move-in and developer inventory and consequently fewer launches left customers with limited choice. The creation of the Real Estate Regulatory Authority (Rera) has also improved builder-buyer sentiment, which is now positive, while easing the overall lending process and buying journey.

Experts said businesses will see an impact once mortgage rates cross 8-8.5%. Sharply rising mortgage rates and rising inflation may lead to a ‘marginal surge’ in near-term demand and also the inability of developers to raise prices further, said a

report.

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