Housing Demand Might Have to Wait for 6-8 months to See Better Days
With interest rates soaring by the day, the festive season is witnessing lesser demand for houses than expected. While interest rates on loans is undoubtedly the foremost culprit, high cost of raw materials and gloomy consumer sentiment are playing their part. However, according to a report by Knight Frank and Ficci, the market should pick itself up in a period of 6-8 months.
Banking on stakeholders’ positive perception regarding the economy in the near future and concrete growth prospects of residential sales and price appreciation, the future of the realty market seems bright. As per the report, the current sentiment index for all asset classes and all locations came out to be at 63 points, indicating an upsurge by 12 points. The future sentiments also saw improvement, and surged by 2 points to 71 points.
The prediction, as per the report, was also loosely based on the prospects identified in the Union Budget 2014-2015. The budget’s substantial emphasis on the real estate sector has been instrumental in imbuing positive market sentiments for the future.
In the previous quarter, it was noted that the equation between the number of housing projects launched and sales of these projects did not agree with each other. A significant improvement was noted in the supply of housing projects, but the sales continued to remain glum due to other market drivers. However, the report suggests that despite this invariable equation, the sentiments around housing segment launches and sale have been rationalized, and the price rise in the housing sector will remain steady throughout the remainder of the quarter.
Samantak Das, Knight Frank India Chief Economist and Director, Research believes that people looking to invest in the real estate market have been keeping the “wait and watch” attitude in the hope that the interest rates would soon take a dip. This attitude hasn’t done any major damage to the market yet, and the actual sales transactions would gain momentum shortly, once various market-driving factors fall in place.
While this Diwali might not turn out to be a victorious saga for many builders and industry players, the prospects laid out for the housing sector in the future should get the market in the lights well before next Diwali.
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