Realty stocks rally with home loan rate cuts

With banks offering reduced home loan rates as the festive period offers the markets are witnessing a rally in property stocks., according to a report in The Economic Times. Top lenders like HDFC, Kotak Mahindra and State Bank, among others recently announced a cut in rates on various personal and home loan segments to facilitate affordable buying among citizens. This also led to a rally in stocks with Godrej Properties, Oberoi, Puravankara and DLF rallying greater than 10% on September 23.  The TheNifty Realty index jumped as a lot as 9%. The home loan rates offered by various lenders are at their lowest, in a range of 6.5-7.0% for 20-year housing loans.

The stamp obligation by the state of Karnataka has been reduced to 3% from 5% on properties under Rs 45 lakh. Motilal Oswal has said that Mumbai will witness over 7,000 property registrations in September.

Godrej Properties’ stocks rallied 34% final week, whereas DLF and Sunteck Realty gained 17% and 11%, respectively. The housing projects have been advanced by the builders due to easing of Covid restrictions and declining cases, lower loan rates, robust hiring, and salary hike in the IT/ITes sector.

Adhidev Chattopadhyay, analyst, ICICI Securities, said, “We expect the momentum in real estate demand to be carried forward into the December quarter with festivals of Dussehra and Diwali and expect developers to post record sales booking numbers in the second half of FY22 led by new launches.”

The pan-Indian residential market share is expected to expand to 29% in FY24 from 25% in FY2. “DLF, Oberoi Realty, Brigade Enterprises, Sunteck Realty, and Mahindra Lifespaces are our top picks,” Chattopadhyay said.