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BENGALURU - Indian house prices will rise this year and next at a faster pace than predicted just three months ago, supported by the economic recovery from the pandemic, according to a Reuters poll of property analysts.

Once a bright spot in India's economy, the housing sector was struggling even before COVID-19. But unlike most other major world property markets it has remained in the doldrums throughout the pandemic.

Average house prices rose only 2.5% last year, according to Reuters calculations based on the Reserve Bank of India's House Price Index. That compares with double-digit gains in nearly every other property market.

But as Asia's third-largest economy gets back on track, the housing market was expected to pick up pace.

The Feb. 9-28 poll of 13 property analysts predicted national house prices to go up a median 5.0% this year, an upgrade from the 3.75% expected in a December survey.

Average Indian house prices were expected to rise 7.0% next year and in 2024, partly driven by increasing input costs for new homes as oil prices were expected to rise further as the Russia-Ukraine crisis worsens.

"The third wave of the pandemic has apparently not dented business confidence and investors appear mostly unperturbed this time. We expect a rise in prices over next two years provided no major socio-economic disruptions occur," said Arvind Nandan, managing director of research at Savills India.India house price inflation

Nearly three-quarters of respondents, or 8 of 11, to an additional question said the Indian housing market would become a buyer's market in 2022.

"(The) Indian housing market is already a buyer's market, and the pandemic further increased this trend in 2020 and 2021 with consumer preferences largely tilted towards ready homes or those nearing completion," said Anuj Puri, chairman at ANAROCK Property Consultants.

The Indian real estate sector is expected to account for 13% of India's GDP by 2025, according to NITI Aayog, the official public policy advisory to New Delhi.

Construction, which has traditionally been a major employment generator for the largely unskilled labour force in India, received a special allocation in the February budget.

However, there was no clear consensus among analysts if the allocated 480 billion Indian rupees ($6.3 billion) would be enough to boost affordable housing in India. Five of 10 respondents said it would help, the rest said it would not.

For the time being, monetary policy is also helping. The Reserve Bank of India held on to its accommodative stance at its February meeting for the 11th consecutive meeting and kept its repo rate at a record low of 4.00%.

A separate Reuters poll showed the RBI would start raising rates next month, with the repo rate reaching 4.75% by the end of the next fiscal year, end-March 2023.

The median response to a separate question showed the repo rate would have to rise to that rate by the end of December this year to significantly slow the housing market. Forecasts ranged between 4.50% and 5.00%.