Since the last few years, the real estate sector in India has been witnessing a fall in sales, especially in the residential sector. As a result of this, the contribution of the real estate market to the country’s Gross Domestic Product (GDP) has dropped sharply. In the year 2019, the commercial section of the Indian real estate market saw some improvement, but the same could not be said for the residential sector.
The government of India has recently taken some steps to revive the real estate sector in India. Liquidity has been raised for Housing Finance Companies, and External Commercial Borrowings (ECB) funds have been relaxed. The government has also approved a 25,000 crore rupees alternate fund. Our top real estate agents in Pune can tell you all you need to know about the new rules and regulations.
Recent surveys have shown that the sentiments of real estate stakeholders are becoming increasingly optimistic. In fact, between October to December, 53% of stakeholders said that they felt positive about the condition of the real estate market in India. It has been found that although the sentiments went down in the 3rd quarter of 2019, they improved drastically in the 4th quarter.
Some of the macro-economic indicators have improved recently which is one of the reasons behind the rise in sentiments. Since the last 3 years, the Indian real estate sector has been under constant pressure. The demand was low, and there were excess items in the inventory that could be sold at a lower price only. The funding for the sector dried up due to the NBFC crisis getting worse. This increased the cost of borrowing funds and adversely affected the finances for this struggling sector.
But in the 4th quarter of 2019, real estate sentiments rose due to a number of steps taken by the government. Considering India’s poor economic condition, this optimism is significant. The residential sector of the Indian real estate market is still struggling, but currently, it is stable, and conditions are expected to improve in the future, due to the positive outlook. In such an environment, Investment in property might be a prudent decision.
In spite of the positive sentiments, the stakeholders are exercising caution with their expectations. Most of the stakeholders have predicted that the real estate sector would stay at the same place, although chances are, the situation would not get any worse. 79% of stakeholders have predicted that real-estate property prices would either remain the same or fall a bit in the coming months.
The rising of sentiments can be credited to the hope that more and more individuals will emerge to lead the sector and help it to grow further. This will result in ease of doing business and transparency. Following the steps taken by the Indian government, the sales volume was seen to increase in some residential properties in Noida and Gurgaon. Experts say that the average buyer is now more confident and informed, due to the structural reforms by the government, and this has caused the general public to feel more confident about investing in real estate in India. Our top real estate agents have also confirmed this rise in sentiment among buyers.
The rise in the sale of properties can also be attributed to the fact that buyers are getting better deals in the Indian real estate market these days. The way the market is now, buyers are in a better position to negotiate prices. They want to get better deals, and this has improved sales. Experts in the real estate industry say that the residential sector is also gradually improving, but there a number of factors to consider like pricing, developers setting overly adventurous prices for the properties.
Property sellers are resorting to offering discounts in order to attract more buyers. Such discounts involve prices being slashed for the properties, or waiver for government fees, no parking charge, etc. In spite of all these measures, not every residential property is selling well, and this is true for commercial properties as well.
Government measures that may lead to the revival of real estate
The real estate market has longed for an industry status since time immemorial. Gaining such a status will help in procuring funding at a lower rate. This is important because the procurement of funding is a major roadblock for the industry. Tax amendments can help revive the real estate sector by removing multiple rates and introducing a single standard rate for taxes.
Real estate agents and developers often need to seek the approval of multiple government bodies before starting a project. Introducing a single body clearance system might help the real estate sector because projects can be initiated faster in such a system. Stamp duty is another expense that real estate developers feel is unnecessary, hence cancelling this duty or including it as a part of the single rate of tax can be beneficial.
The Indian real estate market could also do with a lowering of interest rates. In 2019, the policy rates were reduced by the Reserve Bank of India, but this was not followed by the commercial banks. The demand for housing has increased greatly in the past few years, and slashing the interest rates could give the Indian real estate sector a much-needed boost.
Reducing the income tax would make the buyers eager to invest in property, thus improving the condition of the real estate industry. Slashing the interest rates for housing loans can also enable buyers to invest in their dream property. As more and more buyers invest in properties due to the relaxed tax rates, the real estate market is bound to get better. Our top real estate agents in Pune can tell you need to know about housing loans and their interest rates.
Although the real estate market in India was suffering, it is slowly witnessing a revival in recent times. But it needs the combined support of the people and the government in order to thrive.