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Housing prices may further increase by 5% in FY24: Ind-Ra
Mar-29-2023

India Ratings and Research (Ind-Ra) in its latest report has said that housing prices have risen by 8-10 per cent in this fiscal year (FY23) and may further increase by 5 per cent in 2023-24. It has revised the outlook on the residential real estate sector to neutral from improving for FY24.

According to the report, the residential real estate market continued its upward trajectory in FY23 (sales growth of 15 per cent year-on-year for top eight real-estate clusters) despite pressure from higher input costs, increasing mortgage rates, and domestic and global recession. It said recessionary and inflationary pressures could impact near-term demand slightly, but it expects the market to absorb the pressure. It believed demand would pick up eventually. Overall, it expected the sales momentum to continue and housing sales to increase by 9 per cent year-on-year, supported by a steady, healthy demand.

Ind-Ra pointed out that construction costs rose 8-10 per cent year-on-year in FY23, with increased input costs causing the blended costs of developers to go up by 5-6 per cent year-on-year. However, it said developers might not hike prices over the next six-to-seven months so as to handle any macroeconomic concerns and might wait for the demand dynamics to play out. It noted that affordability had been a prime driver for housing sales in FY22.

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