‘Home sales, prices to rise, defying rate hikes’

BENGALURU: Real estate player Puravankara Ltd expects both prices and new home sales to rise in the near future, defying rising interest rates, partly due to a recovering job market and strong demand from older millennials, a top company executive said.

The Reserve Bank of India has raised the benchmark repo rate by 190 basis points since May to battle stubbornly high inflation. Banks, in turn, have also hiked their rates, making various loan schemes costlier for borrowers.

“Buyers have already factored that rate hike in and there is still some headroom there,” CEO Abhishek Kapoor said.

“The interest rate is at around 8% right now for home loans, and I think the threshold is till 9%, after which we might see some impact.” Puravankara operates in nine cities and competes with other developers such as Brigade Enterprises and DLF. The company recently posted sales of Rs 7.93 billion for the quarter ended September 30, with the average sale price jumping 12%. Kapoor said bookings and purchases by older millennials and first-time buyers were on the rise in recent months.

“Last year, about 7% to 8% of our sales were coming from the under-35 age group. This year we have seen the climb go up to 17%,” he said. Puravankara plans to launch 15 million square feet of new property by the end of this financial year.