LOW-INTEREST RATES, STEADY HOME PRICES TO HELP BOOST RESIDENTIAL REALTY

Improving home affordability amid 15-year-low interest rates and steady prices in India could help kick-start a recovery of the nation’s residential property market.

“We believe the residential market is in the cusp of its initial phase of recovery, with lowest home loan interest rate and realistic valuation of properties” as per communication by a leading Real Estate Consultant in comments emailed to a Global Market Intelligence Company.

With the stock markets becoming volatile, real estate has emerged as the preferred investment class in India, with more than half of respondents in a survey by JLL saying they would consider buying a new house in the next six months. The survey showed that 91% of the respondents wanted to buy a new home versus renting, and 67% believed that buying a house is a necessity, not a luxury.

“Real estate has emerged as the most resilient asset class today and we see potential for more consumers to pivot towards home ownership in the longer term. In tandem, ongoing work from home arrangements are pushing developers to become more flexible and give homebuyers the option of creating a study room if need be”.

Economic growth key: The Reserve Bank of India held steady at its last monetary policy review on Aug. 6, after having cut its benchmark interest rate by 250 basis points since February 2019 to lend support to the faltering local economy. Real GDP expanded 4.2% in the year that ended March 2020.

Unlock Steps: With the unlock measures setting in, traction in the residential market is coming back with increased walk-ins and queries. At a macro level, home prices have remained stable for the last four to five years, making property valuations relatively more realistic, he added.

New laws may help: Timely completion of projects, quality of construction and transparency were some of the biggest concerns for home buyers in India. Several news laws, including the Real Estate Regulation and Development Act of 2016, another law to prevent property transactions on fictitious names and bringing real estate under the goods and services tax regime have brought greater transparency in what was earlier a largely unregulated sector, analysts say.

The Act for West Bengal, called WB HIRA, has fundamentally changed the way the business of real estate is conducted. The compliance requirements and disclosure norms that developers need to adhere to today have brought down the risks for end-users and investors and paved the way for a stronger and more sustainable market. The “structural shift” brought about by it, is a positive development for the market.

Source: International Marketing Intelligence Company