Housing prices beginning to firm up after 2-yr lull

New Delhi: Housing prices have started to firm up after a two-year Covid lull and unsold inventories have declined on rise in demand, the Economic Survey said on Tuesday, as it anticipated a decline in prices on the back of a cut in import duties on many construction materials.

India's residential market has witnessed recovery this fiscal on pent-up demand with increase in housing sales despite impediments like rising interest rates on home loans and appreciation in property prices, said the Survey which was tabled in Parliament.

The release of "pent-up demand" was reflected in the housing market, as demand for housing loans picked up, the Survey noted. "Consequently, housing inventories have declined, prices are firming up, and construction of new dwellings is picking up pace and this has stimulated innumerable backward and forward linkages that the construction sector is known to carry," the document said.

Housing prices have risen due to an increase in the construction cost amid Russia-Ukraine war that hit global supply chain, the survey said. The Russia-Ukraine conflict affected the supply chain, resulting in price escalations of key building materials like steel, thereby increasing the overall construction cost and resulting in a rise in housing prices, it added.

The Wholesale Price Index for cement, lime and plaster has increased from 127.1 in December 2021 to 137.6 during December 2022, indicating an uptick in the input cost for construction.