Property prices to see uptick over 2-3 yrs

Mumbai: Residential real estate prices in the country are likely to increase over the next 2-3 years. Over the past several years property prices in the key markets including the Delhi-NCR have declined significantly owing to several disruptions to the market.

According to an ICICI Securities report, the possible rise in prices over the next few years may remain in the single digit per year, "While prices have remained stagnant over the last 5 years, we believe that prices may see a single digit rise over the next 2-3 years annually as inventory levels have stabilized," it said.

"While we are believers in an upcycle for the residential sector in India, we are of the view that a sustained single digit sales price CAGR is beneficial for all stakeholders rather than a super cycle similar to FY03-07 where residential prices went up by 3-4x in a short period," it added.

Low mortgage rates and affordable prices are likely to support housing demand, the report noted.

Mortgage rates offered by most large lenders range in the 7-7.5 per cent range for 20-year housing loans and is the lowest ever historically since 2005, it said, adding that even assuming that mortgage rates may inch up over H2FY22-23E, mortgage rates of 8-8.5 per cent (assuming 100bps increase) are still affordable and would not significantly dent buying decisions. Robust hiring outlook for IT, fintech sectors among others and salary hikes will help to support housing demand, especially in South India.