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Noting that the country’s housing and real estate sector has demonstrated remarkable resilience in the pandemic, Deepak Parekh, Chairman, HDFC Ltd on Thursday expressed confidence that it will see even better days in the future.
“...the Indian real estate market is on an upward cycle, which bodes well for us,” Parekh said at the 4th CII Real Estate Confluence 2022.
He noted that in India, the demand for housing has come from genuine homebuyers and not speculators.
The real estate sector has already self-corrected and recovered from its previous down-cycle, Parekh further said.
“Residential housing remains the real star of real estate with demand for housing coming from both first time homebuyers as well as those moving up the ladder to bigger homes,” he said.
Low interest rates
Parekh further said that while we are at “the bottom of the interest rate cycle”, there is sufficient confidence in the central bank that any increase in interest rates will be calibrated and non-disruptive.
It is important to understand that a housing loan is a long-term loan, he said, adding that a customer who wants a home will not hold back because interest rates inch up slightly.
He pointed out that there was a time when home loan rates were as high as 17 per cent to 18 per cent and a marginal increase in rates now will not act as too much of a dampener.
“Today, interest rates are still at historic lows, so a minor increase will not have an impact on the demand for home loans,” he said.
The government has also continued with the tax incentives on home loans which also helps reduce the effective rate paid on a home loan.
Parkeh further observed that incomes are rising faster than real estate prices and therefore affordability should not get impacted.
On a possible increase in housing prices, he said that in certain high-end premium projects, one has already seen a price rise of 15 per cent to 20 per cent though it is not across the board.
“Barring a few metro cities, prices in the affordable housing segment have been stable,” he further said, adding that the sweet spot for housing is still in the price range of ₹50 lakh to ₹1 crore.
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