The Indian real estate sector has been the talk of the town forever. But the pandemic and its impact on the real estate industry has highlighted this influence furthermore. In this article, we explore the various facets of the real estate inflation rate in India and its impact on the industry.
The changes in the real estate inflation rate in India
Inflation has risen by 7% in the last two months across the country. The real estate sector is faced with a crucial question: What does this mean for investment in real estate given the rising cost of living, where individuals carefully examine returns on investments?
According to real estate expert Knight Frank, with a 2.1% increase in rates during the third quarter of the previous year, India ranks 51st in yearly appreciation of home costs.
Who calculates the real estate inflation rate in India?
Using official figures, the Global House Price Index monitors changes in average home prices across 56 nations and territories. The index measures the increase of local currency nominal and real prices. Rankings based on price movement have been calculated using the nominal change in price growth.
The current real estate inflation rate in India
|Consumer Price Index CPI
|CPI Housing Utilities
The overall impact of the rising inflation rate
Modern market economies have inflation, but wise investors hedge their bets on rising assets regardless of inflationary pressure. The Indian real estate industry is anticipated to grow at a CAGR of 9.60% between 2022 and 2027, according to a report by IMARC Group titled “India Real Estate Market: Industry Trends, Share, Size, Growth, Opportunity, and Forecast 2022-2027.” Latent demand exists in India for inexpensive homes, which would primarily increase the demand. Additionally, we are seeing a significant government investment in the development of roads, rail, and air, which will stimulate the entire Indian real estate market.
Inflationary eras are typically accompanied by higher mortgage rates, greater material costs, and growing borrowing costs. These can hinder growth for a while but cannot halt it. The Indian market has always had the ability to stake everything on it and profit from its undervaluation up to this point. As a result, the V-shaped recovery anticipated at the start of 2022 will surely occur.
Rent is the sole item in danger from inflation; landlords will either raise rent to compensate for rising inflation or suffer a loss. It may sometimes take longer to raise the rent than to pass the extra costs along to the renter as inflation leads to higher interest rates, which in turn lead to greater borrowing costs and operating expenses.
Is it a good time to invest in real estate?
It is, but this too depends This optimism for expansion stems from the fact that Indian real estate is always advancing technologically, which will lower operating costs. Artificial intelligence, machine learning, and data integration proactively resolve issues before they arise. Foreign investors hold the Indian real estate market in high regard as well, and with government measures, this investment will only rise. Inflation is clearly trailing potential in this comparison.
Capitalize on the inflation rates
The real estate inflation rate in India has been gradually rising since the pandemic, however, in the long run, investing in real estate in India is a clever financial decision. With that sorted, flats and apartments in Kolkata have become a popular choice among new home buyers. Check out our other blogs to stay informed about the various aspects of real estate investment in India.
Indian real estate is always advancing technologically, which will lower operating costs and profit the owner in the long run.
The average appreciation rate in India is six percent annually.
Various studies show that between 2022-23, real estate prices in India will increase by 5%.