After the outbreak of the Covid-19 pandemic, the real estate sector took a severe hit. With economic losses due to frequent and prolonged lockdowns, people started looking for ways to save money instead of investing it in assets. As such, those who were doing their research on the new construction in Dombivli to buy a new home postponed their plan indefinitely.
A year later, in 2022, things changed altogether. Contrary to the common perception, a sizeable number of potential homebuyers started showing their interest in buying a dream home. It indicates that the real estate sector has a huge demand for new homes. Read on to know more about it, and other aspects related to it, in detail.
An unprecedented rise in the demand for homes
There was a massive drop in the demand for homes after the outbreak of the Covid-19 pandemic in the first quarter of 2020. With lockdowns for a considerable duration of time, and economic losses following it, such a response was understandable.
However, what seems unusual is the sudden surge in the interest of homebuyers in buying a new home. Other than being a new trend, it has been one of the hallmark features of the post-pandemic phase. This trend is apparent not only confined to Dombivli or other suburbs of Mumbai but also in many major cities in India.
Though the new development in the post-pandemic phase appears unusual on the surface, many experts consider it a positive development. Mr. Deepak Parekh, the Chairman of Housing Development Finance Corporation (HDFC), is one of them. He has shared his detailed opinion on the matter in an interview. By and large, his opinion reflects a positive outlook for the future of the housing sector.
If things go as expected, homebuyers will show more interest in new projects in Dombivli and other suburbs of Mumbai. Also, potential homebuyers in the major cities in India will be inclined toward this idea in the next few months down the line. Things will continue this way unless there is an abrupt change.
Rising interest rates will not deter homebuyers from investing in their dream homes
Interest rates affect the buying decision of homebuyers. It is evident from that fact that before investing in a residential property in Dombivli or any other suburb of Mumbai, most potential home buyers do their research on the stability of the real estate sector. More often than not, they consider buying a home only when they find that the inflation is under control. It makes sense as high inflation leads to a surge in the interest rates of home loans.
However, things have changed at present. Despite the possibility of a rise in the interest on home loans, a sizeable number of homebuyers are keen on investing in one of the residential projects in Dombivli and other suburbs of Mumbai. This has primarily happened due to tax incentives that allow homebuyers to offset the rising interest rate on their home loan. It is one of the reasons why the real estate sector is touching a new high every day.
Inflation will not have a major impact on retail loans
From their past experience, banking institutions understand how rising inflation leads to bad assets. So, banking institutions, as well as other lending institutions, do their best to mitigate the risk of non-performing assets. They do it to ensure the availability of sufficient capital to prevent a crisis in financing home loans.
In view of the rising demand for homes, banking, as well as non-banking institutions, will confidently offer double-digit credit to those who wish to buy a new home. There is a greater likelihood of it happening, despite a lacklustre performance of offering credit to applicants last year. As a large chunk of bad assets has been removed from the system, the banking sector will be stronger than ever throughout 2022.
However, lending institutions will also take steps to avoid unsecured loans. Instead, they will focus on secured loans to avoid non-performing assets.
The rising demand for new homes is a reality in the current situation. Keeping it in mind, banks will be keen on offering loans to homebuyers. This is because the capital hygiene of banks and other financial institutions is in better shape due to the removal of bad assets. If you have been awaiting the right opportunity to buy your dream home, go ahead and book it with confidence.