Discover the factors that have propelled the realty index to new heights.
As the markets were in a bull mode for most days this week, the FMCG Index was stealing the limelight for the rally, whereas IT lost the show. But, in hindsight, another index played a crucial role in the market rally: The Realty Index.
What’s Happening?
If we look closer at the performance over the past month, it’s clear that the S&P BSE Sensex has delivered a decent return of 1.59% as of June 15, 2023. However, the S&P BSE Realty Index has truly stolen the spotlight with a jaw-dropping return of 9.79% during the same period.
Some real estate companies have been shining exceptionally bright during this exciting week. Brigade Enterprises touched its 52-week high, and Prestige Estates Projects, DLF, and Macrotech Developers recorded new all-time highs.
Reason Behind the Rally
According to Zee Business, many analysts believe the rally is because of two key factors. Firstly, it results from a sustained period of growth and positive market conditions (a multi-year upcycle) and a temporary pause in the benchmark interest rates by RBI.
The report also suggests a sense of urgency among buyers driven by pent-up demand following the COVID-19 pandemic, as rising property rates and higher home loan interest rates may affect affordability.
What National Housing Bank (NHB) Data Has to Say?
The National Housing Bank’s report, released on 8th June 2023, revealed that housing prices experienced an upward trend in 43 out of 50 cities across India during the fourth quarter of FY23. This positive development supports the prevailing optimism within the real estate sector.
What’s Next?
The home loan rates are still lower than those observed before the COVID-19 period. This has contributed to a healthy affordability level for potential homebuyers. However, the sustainability of the current level of demand will depend on various factors, including the movement of home prices, purchasing power, and borrowing costs.
It remains to be seen whether these factors will remain favourable or potentially change in the future, affecting the demand for housing.
That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!
*The companies mentioned in the article are for information purposes only. This is not an investment advice.
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