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The ongoing stress in the economy on account of high inflationary pressure may adversely impact the real estate sector going by a sentiment index.
As per the latest Knight Frank-Naredco Real Estate Sentiment Index Q3 2022 (July – September 2022), the current Sentiment score has declined marginally from 62 in Q2 2022 to 61 in Q3 2022 on account of the economic scenario playing out globally.
“The Current Sentiment Index score has scaled down, primarily because of the dark global economy and the current geopolitical risk due to the Russia-Ukraine war. Although it has declined marginally, it still shows optimism since perception of the Indian economy and the real estate remains resilient thus far,” the entities said in a report.
The Future Sentiment Score, which measures stakeholder perceptions for the real estate sector over the next six months, has decreased from 62 in Q2 2022 to 57 in Q3 2022.
“As inflation remains high in India, tightening monetary policy measures and an adjusted economic growth forecast have altered the stakeholder sentiment for the next six months. Both the Current and Future Sentiment Scores have remained mild despite the fall,” the entities said.
“The Current Sentiment Index score and the Future Sentiment score have moderated in Q3 2022 as stakeholders exercise caution as the impact of the global economic headwinds on Indian economy is yet to play out. Additionally, the housing affordability has shrunk further after the repo rate hike in September 2022,” the entities added.
Shishir Baijal, CMD, Knight Frank India said, “The real estate sector over the past few quarters continues to be strong. However, because of the headwinds caused by the high rate of inflation and geo-political tensions, the Future Sentiment Index has shown a marginal decline and that could influence the developers’ sentiment in general in the next few quarters.”
Rajan Bandelkar, president, Naredco and director Raunak Group said , “Despite inflationary pressures, prospective homebuyers will continue to invest in the market. The market has several reasons favoring homebuyers. After increasing the repo rate sequentially over the past few months, the RBI will likely increase the key policy rate again in December. But the sequential rise in repo rate has very little impact on mortgages in the affordable housing segment.”
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