Mumbai: The affordability for home purchases is expected to improve for the better in 2024, based on the expectation of a 60-80 basis point repo rate cut during the year. This is expected to keep buyers’ affordability within a very comfortable range and sustain the momentum in the market over the next year as well, says a JLL India study on the home purchase affordability levels.
While India was not fully insulated from global shocks in 2023, improving domestic inflation levels and India’s economic growth outpacing the rest of the world provided headroom to the central bank to maintain status quo through a large part of the year.
The response from the residential markets was robust as sales for the first nine months of 2023 rose to 90% of the full-year figures of 2022.
The affordability levels for home purchase in India saw a decline in 2022 for the first time in a decade having hit peak affordability levels in the previous year. Global recessionary winds and rising interest rates saw India’s central bank raising the repo rate by 225 bps from May till December 2022. And a further 25 bps hike was implemented in February 2023.
The strong residential price growth over the past 12 months amid sticky interest rates did weaken affordability levels but did not act as a momentum-inhibitor, says the report.
“We are in the middle of a sustained bull run with buyers continuing to access primary residential markets. Homebuyers look at multiple factors including but not limited to the prevailing economic scenario and future expectations of income and inflation. Also, employment market prospects, income & job stability and current & future savings targets are equally critical when making home purchase decisions,” said Siva Krishnan, MD and head of residential services, India, JLL.
