Residential property prices have shot up by 5% - 12% across the country, even as the demand for housing has spiked, two years after Covid-19 played spoilsport. While developers are attributing the hike to surge in raw material costs and petroleum prices, housing finance companies (HFCs) are likely to witness demand for bigger ticket home loans.
Leading property advisory ANAROCK said there was a 4% jump in the average property prices in the top 7 cities in Q1, 2022 as against Q1 2021, wherein Hyderabad has already seen prices go up by 5%. “Rise in property prices was inevitable and sooner or later we will see between 5-10% increases in 2022,” Sanjay Chugh, city head - Chennai, ANAROCK Group said.
Developers have started raising prices but it will be too early to comment on increase in home loan ticket sizes since the impact will be felt over the next few quarters. Amit Agarwal- CEO & co-founder of NoBroker.com said the average ticket size for loans processed by the firm saw an increase of 10% this March over February. "The price increase has gradually started in March and impact will be seen in the coming quarters,” he said.
As per the RBI norms, HFCs offer Loan to Value ratio (LTV) of 90% for a property value of less than Rs 30 lakh, 80% for a property worth between Rs 30 Lakh to Rs 75 Lakh and 75% for properties worth more than Rs 75 lakh. The increase in property prices is unlikely to alter this ration for home loan disbursals.