Housing prices in India are going to remain stagnant for a while. As per poll by news agency Reuters, housing prices in India will barely rise this year owing to the slow economy and the liquidity crisis.
After nearly tripling in the past decade and rising for many years at double-digit rates, house price gains have slowed over the past two years. As per Reuters calculations based on the Reserve Bank of India’s All-India House Price Index and survey of 20 top property market experts, national house prices are forecast to rise just 1.3 per cent this year.
A majority of experts reportedly claimed that an economic slowdown and bad debts in banking and other financial institutions were the main downside risks to the country’s housing market this year. Even the next year, house prices are forecast to gain just by 2.5 per cent.
Although the government last month announced a cut in the tax charged on sales of residential properties under construction to stimulate consumption, the upcoming General Elections will make the market stakeholders, as well as buyers, go in a wait-and-watch mode. Also, elections are historically known for syphoning funds from the real estate.
“It is no secret that in the past, funds parked by political parties in real estate were sucked out of the system to finance their campaigns – and the market is currently facing a serious liquidity crunch,” Anarock’s Mr Anuj Puri said, NDTV reported. “The period leading up the upcoming election could prove to be stressful for the overall real estate market.”
Also, most of the expert respondents reportedly believe that the real estate market was overvalued and a price correction was on the cards. While Delhi and Mumbai were rated either “overvalued” or “extremely overvalued” by nearly all respondents, more than two-thirds of analysts found average homes in Bengaluru and Chennai to be “fairly priced”.
Housing prices in Delhi are expected to fall by 2.0 per cent this year and stagnate in 2020. Mumbai prices too are expected to barely rise this year and next. However, the prices in Bengaluru and Chennai is in for the rise of 2.3 to 3.3 per cent this year and next.