New Delhi [India], August 16 (ANI): A resurgence in demand for residential real estate has led to an average 5 per cent increase in prices across the top eight cities -- Delhi-NCR, Mumbai, Kolkata, Pune, Hyderabad, Chennai, Bengaluru, and Ahmedabad -- while registering a marginal decline in unsold stocks during Q2 of 2022 (April-June), a joint report by real estate association CREDAI and domain experts Colliers and Liases Foras said.

Prices for residential properties, which have surpassed pre-pandemic levels, have been seeing an upward trend led by rising demand amidst rising prices of construction materials.

The sales momentum that started in the latter part of last year continued in Q2 2022 as well, led by pent-up demand and attractive pricing, a statement said on Tuesday.

"The central bank (RBI) continues to increase repo rates to offset the impact of inflation and banks are expected to increase loan interest rates including that of home loans," said Harsh Vardhan Patodia, President of CREDAI National.

The sector may see a marginal dip in demand due to increasing interest rates, said Patodia, adding that he was confident that the sales will continue to grow across segments from September as we enter the festive season.

"Rising homeownership amongst millennials supported by higher disposable income and willingness to upgrade to larger spaces equipped with better amenities have sparked a sharp growth in housing demand in the last few quarters," Patodia added.

For the record, the monetary policy committee of the Reserve Bank of India last week unanimously decided to raise the repo rate by 50 basis points to 5.40 per cent in order to contain the persistently high inflation. The latest hike takes the repo rate above pre-pandemic levels of 5.15 per cent.

Raising interest typically suppresses demand in the economy, thereby helping inflation to decline.

In line with the global trend of monetary policy tightening to cool off inflation, the RBI has so far hiked the key repo rates -- the rate at which the central bank of a country lends money to commercial banks -- by 140 basis points.

In India, retail inflation has been over the Reserve Bank of India's upper tolerance band of 6 per cent for the seventh consecutive month in a row in July.

"RBI has increased the repo rate amidst inflationary pressures and banks have already begun increasing the lending rates. However, the upcoming festive season is likely to keep the market sentiment high resulting in higher sales." said Ramesh Nair, Chief Executive Officer, India and Managing Director, Market Development, Asia, Colliers.

Close on the heels of RBI's rate hike, many banks and housing finance companies too have followed suit and raised lending rates. This is expected to raise EMIs for loan takers.

"Prices to remain range bound. With discounted EMI schemes, we see early signs of developers absorbing the impact of increasing interest rates. Sales volumes are likely to improve as we see growing new supply with festive offers, said Pankaj Kapoor, Managing Director at Liases Foras. (ANI)