[Tmdl.edu.vn] High inflation, tightening monetary policy measures and an adjusted economic growth forecast have altered the stakeholder sentiment for the next six months, shows a recent survey.
Even though global headwinds seem to have caused a slight dent, resilient domestic economic conditions continue to fuel positive consumer sentiment, shows a recent survey by property brokerage firm Knight Frank and real estate body NAREDCO.
According to the Knight Frank-NAREDCO Real Estate Sentiment Index Q3 2022 report, current sentiment score has declined marginally from 62 in Q2 2022 (April-June) to 61 in Q3 2022 (July-September) primarily because of the dark global economy and the current geopolitical risk due to the Russia-Ukraine war.
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The future sentiment score, which measures stakeholder perceptions for the real estate sector over the next six months, has decreased from 62 in Q22022 to 57 in Q3 2022.
“As inflation remains high in India, tightening monetary policy measures and an adjusted economic growth forecast have altered the stakeholder sentiment for the next six months. Both the current and future sentiment scores have remained mild despite the fall. The current sentiment index score and the future sentiment score have moderated in Q3 2022 as stakeholders exercise caution as the impact of the global economic headwinds on Indian economy is yet to play out. Additionally, the housing affordability has shrunk further after the repo rate hike in September 2022,” the report said.
“It still shows optimism since perception of the Indian economy and the real estate remains resilient thus far,” the report adds.
Trends also indicate that sales and launches are likely to narrow in upcoming quarters—the volume of residential sales and launches have already declined sequentially from Q2 2022 to Q3 2022.
“This is not surprising, as the impact of the cumulative repo rate hike of 190 basis points is yet to be passed on fully to homebuyers, the festive period discounts on home loans will no longer be available after October 2022, and the geopolitical tensions and inflationary risks will continue to persist in the foreseeable future,” the repo said.
“The extensive changes in the geo-political environment outside has pared down the overall growth across all economies. Despite the retardation in the growth pace, India remains as the highest GDP growth in the larger economies. The real estate sector over the past few quarters continues to be strong. However, because of the headwinds caused by the high rate of inflation and geo-political tensions, the Future Sentiment Index has shown a marginal decline and that could influence the developers’ sentiment in general in the next few quarters,” said Shishir Baijal, chairman and managing director, Knight Frank India.
“A resilient housing sector complements the growth we witness now. The sector has been consistently growing in housing sales and volumes for the past several months and has shown resilience despite the global uncertain economic conditions and soaring inflation. Despite inflationary pressures, prospective homebuyers will continue to invest in the market. The market has several reasons favouring homebuyers. After increasing the repo rate sequentially over the past few months, the RBI will likely increase the key policy rate again in December. But the sequential rise in repo rate has very little impact on mortgages in the affordable housing segment. First-time homebuyers will also receive tax incentives to buy now. With an abundant supply of good-quality housing projects, homebuyers can strike a good bargain while transacting,” said Rajan Bandelkar, president, NAREDCO, and director, Raunak Group.
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