The real estate market has steadily picked up after the slowdown in the first half of 2021 due to the COVID-19 pandemic and the resultant lockdowns. Keki Mistry, vice-chairman and managing director of Housing Development Finance Corporation (HDFC Ltd), on Friday, said that real estate demand was back in the metro cities and added that home loan lending rates have bottomed out.
Mistry attributed the rise in demand to income levels rising in the past few years.
"In the period from 2017 to 2019, or maybe even 20 the demand was largely focused on the tier-II tier-III towns in the outskirts of big cities. In the last one or two years, we have started seeing a pickup in demand in the metro cities. So cities like Delhi, Mumbai, Bangalore, Pune, Hyderabad, Chennai, these are the cities which are reporting very strong growth."
The HDFC chief believes that affordability has increased in the market and it is an opportune time to buy real estate. To supplement this, he said that the month of October saw a high level of loan disbursements by HDFC.
"If you look at October, the first month of this quarter, October, we saw the highest ever level of disbursement we ever had an HDFC’s history. So clearly the demand is very, very strong, and to my mind will sustain for a long time,” Mistry elaborated.
Mistry also believes that the lending rates have bottomed out but he does not expect the RBI to start raising rates in a hurry.
“In terms of interest rates, I think interest rates have bottomed out. I don't expect RBI to raise rates in a hurry. I certainly don't expect that. But over a period of the next 6, 9-12 months, yes, of course, it is possible. It depends a lot on global factors. It depends on inflation. It depends on oil prices, it depends on so many factors, which are not within our control,” he added.
The yield curve, according to Mistry, has been steep due to excess liquidity in the system. This has been reflected in the demand seen in the high-end market which has seen a pickup after being subdued from 2017 to 2020.
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