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Crisil Ratings predicts Indian housing prices will rise by an average of 4-6% in the medium term, with residential sales volumes growing 5-7% this fiscal year and the next. This comes after double-digit growth in the past two financial years. Despite demand stabilizing, supply is expected to outpace it, causing inventory levels to increase. However, strong collections and healthy balance sheets are set to maintain developers' credit profiles. The rebound is driven by improving affordability due to lower interest rates and price growth normalization.
Crisil Ratings forecasts a rise in housing prices and stable sales growth for real estate developers. This projection impacts India's residential property market for the medium term and the current and next fiscal years, as demand steadies after a period of post-pandemic recovery. Advertisement
The analysis based on Crisil's study of real estate companies shows that housing prices are likely to increase by an average of 4-6% in the medium term, with sales volume or demands projected to rise by 5-7%, during this fiscal year and the next.
In the three financial years leading up to the current period, sales in value terms recorded a compound annual growth rate (CAGR) of around 26%. Demand, based on volumes, saw a 14% CAGR, with the remaining portion attributed to growth in prices.
Crisil states that supply is expected to continue exceeding demand, which means inventory levels should gradually increase for the current and next fiscal year. Despite this, strong collections and deleveraged balance sheets of developers are expected to keep their credit profiles healthy.
Crisil's analysis covered 75 real estate companies, representing about 35% of residential sales in the country. For the current and next fiscal years, demand growth is expected to rebound. This is driven by improving affordability due to lower interest rates and a normalization of price growth. In the last fiscal year, demand remained flat. This was attributed to higher property values and delays in project launches in some cities due to factors such as state elections and changes in property registration rules.
Source- PTI
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