Experts predict that the rise of the Omicron variant can stifle the housing industry for a short time in Pune.
While cheap lending rates and other incentives helped Pune see record property sales in the calendar year 2021, real estate experts say the fast-spreading Omicron version of Covid-19 could shake the market for a short time.
However, the market’s momentum may be sustained until mid-2022. But there are increasing fears among the investors and buyers alike – Is the Property Bubble Set to Burst?
According to experts, the likely measures envisaged by the RBI to combat inflation may affect the market by raising interest rates on house loans.
Mumbai and Pune were the frontrunners in property sales during 2021, accounting for almost 42 per cent of overall sales across India’s major markets.
Pune has one of the highest levels of affordability in India.
The monthly EMI for a house loan consumes 28% of the monthly paycheck. SOPs and incentives from the state government such as the stamp duty refund, and concessions in registration, also benefited the real estate sector.
However, in the coming year the input cost pressures and supply chain concerns are likely to cause property prices to climb by 5 to 8 per cent. With the end-users will continuing to be the dominating market driver, the unsold inventory is a cause of concern causing the excessive supply-side traction in the outskirts of major cities is a major source of concern.
Additionally, the extra floor space indices (FSI) and Transferable developmental rights (TDR) currently available to developers as a consequence of the Unified Development Control (UDC) guidelines should result in higher supply in the housing market in Pune.
Even if the mortgage rates rise in 2022, the affordability levels will remain relatively static. Also, the Omicron may make people wary about investing in property in the metro cities, especially in states like Maharashtra where the Covid transmission rates are way above the national average. With increasing signs of work from home (WFH) culture becoming a norm, the rental property rates will continue to show a downward trend.
This makes us think – Is the property bubble set to burst?
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