Lower Mortgage Rates Rekindle Buyers’ Interest in Real Estate

The popularity and inventory demands have been running high on the back of lower mortgage rates, better sales momentum and the impending implementation of the Real Estate Regulatory Act that’s expected to boost the performance of organised players like Wave Infratech.

“With interest rates being at near bottom levels, realty sales volume has started to move up over the past couple of weeks steadily. Money supply in the market has also increased, and that’s good news for a sector like real estate. The worst that could have happened through demonetization is the matter of past. The entire picture is changing now, particularly with RERA, which will help large developers to serve the market better.

While the RBI refrained from lowering the repo rate in its recent policy meet, home loan rates have already eased more than 100 basis points over the past year to around 8.6%, which is a six-year low and this is certainly prompting homebuyers to act.

“Historically, (2009 and 2006), as mortgage rates come down to 8%, handle volumes in the market have revived significantly. Price reductions in the past one year across markets coupled with improving income growth have resulted in affordability reaching 7-year highs across markets. Also, earning growth has started to revive selectively across names and should revive in a broad-based manner in the residential business by FY18.

Most large global investors have preferred to participate in the commercial leasing market as the retail space has been going through a very sluggish phase with tepid demand. Real Estate hot areas such as Delhi, Noida, Mumbai and Bangalore will generate more residential housing demand in the coming time of the year.

With RERA for stringent law and lower mortgage rates, buyers are looking at vertical structures with high hopes.

Information Source: ET Realty

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