Home prices in India are expected to remain above consumer inflation, despite the likelihood of higher interest rates for a longer period, according to a recent survey.  

The study, involving 12 property analysts, revealed that the surge in savings and minimal income disruption experienced by cash-rich home buyers during the pandemic has contributed to increased demand, making the market more resilient to interest rate fluctuations than initially anticipated.

The poll, conducted between May 16 and June 1, projected that national home prices would rise by a median of 6.0% this year, an upgrade from the previous estimate of 5.5% in March. However, the forecasts varied significantly, ranging from 1.8% to 20.0%.

The survey indicated that average home prices are expected to increase by 5.5% in both 2024 and 2025, surpassing the consumer price inflation forecasts of 5.1% and 4.8% for the fiscal years 2023/24 and 2024/25, respectively.

Arvind Nandan, the managing director of research at Savills India, expressed confidence in the stability or gradual increase of prices, stating that the interest rate cycle is approaching its conclusion. 

The Reserve Bank of India’s tightening cycle has seen a modest 250 basis point increase in the repo rate, in contrast to other major central banks. 

The repo rate is projected to remain at 6.50% for the remainder of 2023, with a potential decrease expected early next year.

Anuj Puri, chairman of ANAROCK, noted a reduction in the supply and demand of affordable housing, while the luxury and high-end segments have witnessed increased traction. 

Consequently, future developments are anticipated to focus on these segments, likely contributing to a notable overall increase in home prices.