For instance, whereas demand for residential property has expanded significantly, it is at a slow pace from household’s angle. Also, land prices are rising due to supply constraints. According to market research companies, the key structural factors that will drive the sector forward include increasing disposable incomes and affordability, low vacancy levels and high rental returns.

Amid a global economic slowdown and slowing economic growth in major global market, there will be some risks to the economy. Rising interest rates, reduced cash flow of borrowers on account of the high inflation rate, increasing cost of construction, leading to both a rise in property costs and slowdown in new inventory launches, and halting of the government’s Credit-linked Subsidy Scheme (CLSS) are some of the challenges facing this segment.”

The interest rate cycle has turned around, and most recently, the Reserve Bank of India (RBI) has increased repo rates by 90 basis points. This means that home loan EMI in general will be 6.1-6.4 per cent higher than a year ago, while for an affordable housing borrower, the loan EMI would rise by about 5.3 per cent.

The report said the construction costs for the housing sector have increased sharply with a steep increase in the prices of various raw materials, including cement, steel and concrete along with higher costs

In a recent report, the Bank of Baroda said that in global market the high inflationary environment, coupled with high interest rates, is likely to affect loan affordability for new home buyers, which could lead to a slowdown in Asset Under Management (AUM) growth for home financiers due to a moderation in disbursements. The bank further said it expects the housing finance sector to grow at 13 per cent y-o-y in FY23, with affordable housing finance witnessing a growth of 16-18 per cent.