MUMBAI: The real estate industry in India is going through the worst phase in history, according to an analysis done by developer Modispaces.
In a country where buying a home of one’s choice is among the most significant decisions in an individual’s life, this is a seemingly paradoxical development. The real estate market in recent years had the lowest number of new launches due to demonetization, the implementation of the Goods and Service Tax (GST), and the newly appointed Real Estate Regulatory Authority (RERA).
However, is low inventory a bad thing? Modispaces says otherwise. Surprisingly, while stocks plummeted, home sales have gone up since last year. Therefore, if the same number of people choose to list their home this year in contrast with the previous year, the currently available inventory should drop due to more people buying what is available on the market. The currency ban was a blessing in disguise, encouraging formal banking and more substantial deposits, resulting in a higher cash reserve with banks, which flowed into the economy and resulted in a higher GDP. The masses now have white money to safely invest in real estate, which is backed by a healthier socio-political environment.
Interestingly, the demand for more liquidity to fund elections hints at a distress sale of property before the polls and a price increase post-election. The government has continued its efforts to achieve the vision of ‘Housing For All by 2022’ by setting up a dedicated fund for affordable housing in Union Budget for 2018-19.
Under Prime Minister Awas Yojana (PMAY), 100 lakh houses will be constructed by 2022. Additional government schemes like the Credit Linked Subsidy Scheme (CLSS) has ensured the availability of affordable credit for low-cost housing buyers. Reduction of GST from 12 per cent to 5 per cent has escalated demand and reduced prices for unfinished schemes but it will eventually increase the prices of projects that are ready for possession. Finally, the strengthened regulations under RERA have noticeably enhanced consumer confidence in real estate transactions.
Although the uncertainty around the Lok Sabha election backs pre-election decisions, the post-election scenario is not going to harm the investments that were made earlier. Even if another political party assumes the reins of government, they will not interfere with their cash cows.
Hence, it can be safely established that the right time has finally arrived to reap some benefits in property business. Smart investors don’t wait to buy real estate – they buy real estate and wait. PR Newswire
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