Mumbai leads as India’s real estate sales go up by 50% despite higher interest rates during festive season

RBI’s latest interest rate hike in response to the US Federeal Reserve’s moves for controlling inflation is bound to make borrowing money a costly affair. Although this will make fixed deposits more profitable, leading lenders such as ICICI, HDFC and SBI have increased interests on home loans. More expensive home loans and higher EMIs were expected to affect demand for real estate, but that doesn’t seem to be the case since developers reported a 50 per cent uptick in sales for the first half of the festive season.

Undeterred by rising costs of borrowing

The momentum that has picked up during Navartri, will probably be sustained throughout Diwali, with Mumbai expected to lead the way considering its real estate sales in the July-September quarter. Mumbai metropolitan region registered a sale of 26,400 new homes, which was ahead of the National Capital Region, where 14,970 units were sold in the third quarter. The countrywide spike in property sales, buoyed by a positive post-pandemic sentiment around home-ownership according to Anarock, has remained undeterred by interest rate hikes.

The rich don’t care about EMIs

Demand for luxury housing below the Rs 5 crore price range has been strong, and is only getting more aggressive. These sales are a result of a rising preference for larger homes among the rich in the country. At the same time in Mumbai, 67 per cent demand in the sector has been from those looking for affordable housing. Despite the consistent rise in interest rates, property registrations in September for Mumbai hit a 10-year-high at 8600 in September alone.

Mumbai in demand among big spenders

The city has also witnessed big ticket real estate purchases by CEOs and startup founders in areas such as worli, as well as near business hub BKC. At the same time, Gurugram has been attractive for millennials and startups, since the city is connected to a network of expressways. Speaking of businesses, leasing of office spaces in six cities including Mumbai, Bengaluru and Pune, hit an all time high in the first half of 2022.