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Inflation: How Does It Impact Home Purchasing

Does the cost of housing contribute to inflation?

House or property cost increases are frequently a result of increased raise of inflation. In actuality, housing costs account for nearly 35% of the consumer price index (CPI), a widely used inflation indicator.

Housing Prices and Inflation -Flipside of a coin?

In addition, since 2020, every one of the previous financial years has had double-digit annualized housing price rise.

Rising input costs for building have been a major factor. As was typical historically, the cost of materials and labor as a whole grew by 3 to 8% since 2020.

Supply-chain interruptions caused a 10% increase in these expenses by 2021. Demand was increased by low interest rates as well.


Rental Rates Increase in Housing Sector?

The impact of inflation on rental prices is extremely obvious; in these situations, rates typically rise. This is mostly caused by a rise in rental property demand as a result of increasing borrowing costs for financing real estate purchases. As a result of the increased demand for such properties, this has a knock-on effect on rental rates. Therefore, in an inflationary economy, more tenants are ready to pay higher rental price as opposed to taking out mortgages at unaffordable rates.

The move by the government to raise interest rates could have unforeseen consequences. India can least afford a further slowdown of the economy, which could result from efforts to curb inflation in the country.

Other points in rising housing cost

In accordance with the Indian Stamp Duty Act and Registration Act, Kerala requires the payment of registration fees and stamp duty. Kerala currently charges stamp duty of 8% of the property value in addition to registration fees of 2%. It is to be noted that, in Kerala, there are no discounts for women or the elderly, this also plays a major factor in housing price increase.


Tail end inflation

Tail End – Will Inflation have impact on housing or property purchases?

Since there are so many diverse, dynamic, and interwoven factors affecting the economy, it is challenging to predict inflation. However, there are certain red flags, such as a rapid rise in government spending and an increase in the amount of money the Treasury is introducing.

Be prepared to spend extra if you are purchasing a property during a time of rising inflation. Everything about the home-buying process normally gets more expensive when there is inflation.

gated community image

Where does gated community villa stands during inflation period?

Amidst the inflation, still the demand for villas that are part of a gated community is on the rise as prospective home buyers look for managed common amenities offering a good lifestyle and safe environment.

Also with work-from-home culture still frequent, customers prefer spacious villas in 2BHK and 3BHK configurations as they want more space for recreational purposes. Premium and luxury villa categories are also doing better than pre-covid times due to increase in standard of living among homebuyers and the need for bigger homes.

As per latest real estate reviews, can expect an increase in the number of buyers of gated community residences in years to come. The concept of gated communities promotes a holistic vision that is ideal for the entire family and thus will be the final choice for many homebuyers.

Your villa is only as good as the neighborhood. Choose a gated community if you want to protect the value of your investment. You might want also want to invest in a villa that offers eco-friendly and money-saving amenities. If you are looking a villa in Palakkad, villa for sale in Ottapalam and buying a villa in Chandranagar is best option. OMG has newly launched three gated community villas in Palakkad that too in affordable budget.


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