After a prolonged downturn, the residential real estate market in India is set to pick up as both the end users as well as investors are now showing interest. As per report from a leading research firm Jefferies, there is an expectation that the inventory in the segment could go down to an 8-year low and prices shall also spike by over 10 percent in the next two years.
Real estate market in 2020
While the sales of residential units across 7 major cities saw a decline, there is seen a decline in inventory overhang by 19 percent from the peak levels of 2016. Also, prices during the Covid 19 hit year were largely steady and infact to push sales, there were offers being put on by developers in the market.
"In the southern cities, price discounts were limited to 1-2 per cent as these markets remained correctly priced and were driven by stable economic activity and end-user demand. In other cities, where inventory levels remained high, developers had to offer slightly higher discounts to push sales. But, even there they were not very high. Developers had limited headroom to cut prices as they have been trending down since 2017", said Shalin Raina, managing director - residential services, Cushman & Wakefield.
And as the financially distressed players are finally expected to move out there is consolidation currently vigilant in the real estate market.
Real Estate Price appreciation of a meager 25-30% in 8 Years
In the year gone by there was seen a push in demand for residential real estate in the second half and this is positive for the ongoing year. And now, after just 25-30% rise in residential unit prices in eight years, it is highly likely that prices shall again trend higher beginning second half of 2021 as raw material prices are also surging such as those of steel and cement.
So what prospective real estate buyers should do?
Now as interest rates on home loan as well as prices remained and continue to be low, prospective buyers should seal the deal at the earliest. And buying real estate is lucrative owing to various incentives such as GST (goods and services tax), stamp duty, and registration costs.
Also, instead of price appreciation, investors can for now focus to get rental income as price appreciation can be reaped over the long term.
For better and yet more optimal cost on your purchase, you can avail of benefits under Pradhan Mantri Awas Yojana. Also, when buying for investment purposes, go for areas where there is a flux of economic activity as there is no extra efforts required to scout for tenants at such a place and you can also expect rental appreciation.