The Jan. 13-28 poll of 13 analysts showed average house prices in India would rise 1.3% this year and that not until 2022 would the increase equal the inflation rate with a rise of 4.5%.
Still, that was a U-turn from a 3.0% decline predicted for this year in September, when the housing market was being stifled by the coronavirus pandemic, which has left millions unemployed. The previous 2022 forecast was a 2.8% increase.
The market gained some traction late last year, cushioned by massive fiscal stimulus, accommodative monetary policy and signs of a better-than-expected economic rebound.
“India’s economic resilience and a quick turnaround post the unlock has given possibly the biggest boost to buyers to enter the residential market with greater long-term confidence in India’s economic recovery,” said Rohan Sharma, head of research at Cushman Wakefield.
A 2021 price rise was last expected in a March 2020 poll, just before the stringent lockdown was imposed.
Ten of 13 respondents who answered an additional question said an economic recovery would be the primary driver of housing market activity this year. Two pointed to an easy monetary policy, while one cited a desire for more living space.
India’s economy was forecast to grow 9.5% in next fiscal year assisted by an expansionary federal budget, a Reuters poll taken this month showed.
Ten of 12 market experts who responded to another question expected a significant boost to housing activity from policies in the union budget, due on Feb. 1.
“Expected is relief for second homeowners, promotion of tax concessions for new home buyers and concessions for builders/promoters, giving the sector industry status, and access to cheaper capital and loan reclassification extensions,” said Ajay Sharma, managing director at Colliers International.
All 12 respondents to another question said housing activity would accelerate this year and, when asked about the risk of a resurgence of COVID-19 derailing the housing market this year, 11 of 13 said it was low.
A regional breakdown in the poll showed house prices this year would hold steady in Mumbai, Delhi and the latter’s National Capital Region, compared to contractions of 3.25%, 3.0% and 2.5% respectively, predicted in September.
Prices in Chennai would also remain stagnant while an increase of 2.5% was expected in Bengaluru, compared to no change in the last poll for both IT hubs.
“Unlike early predictions, the residential market rebounded much faster than other segments and the momentum continues to remain strong amidst growing demand for homeownership,” said Anuj Puri, chairman at ANAROCK Property Consultants.