4 Important Factors that Drive the Real Estate Market

Real Estate is the major factors that drive the Indian economy forward. Homebuyers are investing wisely in luxury residential projects that seeds out the positive long term return. Though there has been demonetization and economic slowdown, the government with its approach has made investors to proceed ahead with the investment. During the year 2016, Indian government came out with 4 different reforms:

• Real Estate Regulation Act (RERA)

• Benami Transaction Prohibition Act

• Amendments in REITs

• Goods and Service Tax (GST)

All these have certainly affected the purchase manner of home buyers. According to the certain reports, the sector is set to get valued $180 billion by 2020. This certainly presents that there are key factors that drives the sector ahead:

1. Increase in the Income of Buyers:

Buyers are now willing to spend on luxury flats, and this is due to the increase in their income. There is a gradual shift in the economy from socialism to capitalist, which is due to increase in FDI. Real estate developers have witnessed a rise in investment by home buyers towards the luxury project. However, this growth is majorly seen in urban cities, but not in rural areas.

2. Government Reforms & Policies:

As mentioned above, in 2016-17, government introduced various reforms, including RERA and Benami Property Act that has increased the transparency level and no illegal property holding. RERA was introduced to bring complete transparency between buyers, real estate developers and the authority. The developer needs to get registered with the act while developing the project. These reforms have certainly pushed the real estate market, giving more confidence among buyers to invest on the project.

3. Interest Rates:

Interest rates are an important part of the real estate investment. The ability of the homebuyers depends on the fluctuating interest rates, which will also affect the project. Finance lending institutions keep changing their interest rates, which highly impacts buyers’ investment plan. When the interest rates fall, the cost of borrowing falls creating higher demand, but when the interest rates increase, the buying demand decreases.

4. Availability of Different Properties:

Buyers are hunting for various property options with different rates available in the city. Luxurious properties come up with multiple apartment options with different rates. This gives property buyers a chance to expand their search and invest in the right property. Alternatively, when the number of units in the specific location is high, the price certainly increases, affecting the demand. However, there is a shortage of housing properties in many cities which can be worrying factor.

Conclusion:

Age, race, gender, income and other demographic data are often overlooked when considering the demand and prices for real estate. Major shift in demographic date also affect real estate trends in the economy.

The overall economic strength of a country influences real estate markets too. Economic indicators like the GDP, employment data, manufacturing activity, and the prices of goods are indicative of the health of the economy. So, if the economy is sluggish, so is real estate, in countries where real estate markets are efficient.

All these factors do affect the real estate market heavily and presents the future picture of the industry. It is important to understand these key factors that will drive the real estate market.