Realtors Expect Stability in Realty Sector Post Elections
With the Lok Sabha elections in the country coming to an end, real estate developers are looking forward to a stable government forming at the Centre that will bring relief to the gloomy realty sector in the country. Many developers are also confident that the realty sector will see a bullish run once a stable government is formed at the Centre.
Realty Sector in 2012-13
The Indian real estate industry started witnessing its gloomy days around late 2012 and early 2013. This was primarily due to the rising inflation in the country, which was going beyond control. With this, several costs related to construction went up. Added to that were the increasing property values across several markets such as Mumbai, Delhi and Bengaluru due to high growth in demand for residential projects. Simultaneously, the employment scenario in the country as well as the Indian rupee took a hit.
All these factors had a coupling effect on the buyers’ ability and sentiments to purchase property. This directly led to fall in sales in several real estate markets and stagnancy in few other markets. Cities such as Mumbai and Delhi started witnessing unsold inventory that went up to 48-50 months. Most of the sales presently are happening only in the pre-launch stage due to the discounts compared to market rates.
The last few months have been particularly bad for the industry with sales further going down due to the elections. The unsold inventory levels in the country went up to 700,000 apartments by the end of March this year.
Gloomy days to end
Both developers and property buyers are currently playing the wait-and-watch game, for a new government to be formed at the Centre and the political uncertainty to end. The belief is that a stable government can end the uncertainties in policy regimes, which will pave the way for property purchases. With the day of poll results drawing closer, there are visible improvements in certain sectors such as the stock exchange. Certain economists are also predicting that the worst times for the country’s economy may be over.
While capital markets are already sensing improvements before the election results, the real estate sector usually witnesses a lag. Experts from Cushman and Wakefield said that the coming Diwali could witness good sales and six months later, the property market could witness a bull run. Some experts have also advised developers against raising property prices due to increase in demand after a government is formed, as supply may also improve.
Multiple things are expected from a new stable government, such as bringing down inflation in turn bringing down housing prices and put the regulatory bills in place, which will benefit buyers as well as the overall real estate sector. Builders too are hopeful that improved sentiments of the buyers, sales will improve ending the stagnancy in the market.
