Positive signs of stable growth in Chennai Residential Market
- First phase launch of Chennai Metro Rail Network from Koyambedu to Alandur.
- Reduction in the base interest rate.
- Policy initiatives by the government such as interest subsidies of home loans to low-income groups.
- Real estate regulation bill which is expected soon to streamline the industry.
Chennai is the only market in India which is driven primarily by end users is also one of the stable and least volatile residential markets in India. During the downturns and period when market sentiments are low, potential buyers of Chennai have been postponing the decision to buy property and this trend is changing at a rapid pace.
The main reason being recent interest rate cuts, an after effect of RBI’s cut on repo rate, which made the base rate as low as 9.70%, Many banks have passed on the benefits to the customers and equated monthly installments on home loans will eventually come down. In a low interest rate environment, the cost of borrowing money from banks is relatively cheap and the effect of this can be a rush of property buyers.
Another important factor, which will propel the buying spree, is the launch of the Chennai Metro Rail Network from Koyambedu to Alandur. Areas which will benefit out of this would be along the 10 km stretch in the residential areas of Anna Nagar (West), Vadapalani, Ekaduthangal, Koyambedu and Ashok Nagar where the property prices are expected to go up by at least 15% after operational of the metro rail.
In a long run, Demand for the residential sector will continue to grow not only within the city but also the suburban areas of Chennai due to infrastructure initiatives such as opening up of Outer Ring Road; East Coast Road; Chennai Peripheral Ring Road connecting Mamallapuram to Ennore; second phase of Chennai Metro; etc. Other major planning and development proposals such as Chennai to be considered as part of Smart City Mission, Proposal for Aerospace and Logistics Park near Greenfield Airport at Sriperumbudur, Medical Park at Chengelpet will create huge employment and enhance the residential demand in the respective micro market.
With better home-buying sentiment added with the incentives from the budget, we predict improved sales in the LIG segment and affordable in coming months. However, MIG and HIG segment will witness moderate launch of units and sales from existing supply. The boost in NRI investment and HNI population will give push to luxury housing sector.
Future of home buying looks very bright due to various policy initiatives by the government such as interest subsidies of home loans to low-income groups, real estate regulation bill which is expected shortly will bring in a lot of reforms and streamline the industry which has been disordered for a long time.
The demand for the residential sector will continue to grow not only within the city but also the suburban areas of Chennai due to infrastructure initiatives and hence property prices will keep on increasing. It’s the right time to buy properties since the market sentiments have improved and interest rate cuts are making the cost of borrowing money from banks relatively cheap.
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