With most real estate regulatory reforms in place and strong International Monetary Fund (IMF) GDP growth predictions for India, the Lok Sabha elections 2024 could spur housing demand in the country, according to a report by ANAROCK India.
The report said that housing sales grew significantly in both the election years of 2014 and 2019.
In 2014, sales in the top seven cities scaled up to about 3.45 lakh units while new launches were the highest ever at nearly 5.45 lakh units. Likewise, in 2019, housing sales scaled up to about 2.61 lakh units while new launches increased to about 2.37 lakh units after a dip in the residential real estate market between 2016 and 2019.
Major structural reforms like the Real Estate Regulatory Act (RERA) introduced in 2016, spurred the real estate sector and bought the necessary regulatory checks to boost homebuyers' sentiments.
"Most real estate regulatory reforms and norms are already in place and international organizations like IMF have strong GDP growth predictions for India for the next few years. The Indian economy is growing rapidly, and this indirectly has a positive impact on the real estate market," the report noted.
Additionally, inflation is well under control, and ANAROCK said this has boosted financial optimism and confidence among homebuyers.
As things stand now, all signs currently favour the residential market in 2024, and the year can well create another peak in housing sales and new launches, Anuj Puri, Chairman of ANAROCK Group said.
Developers closing land deals
Based on growing homebuyer demand, developers have closed substantial land deals in the last year. Many large developers with good track records and solid balance sheets are venturing into newer territories to increase their presence.
ANAROCK data said that of 97 land deals closed in 2023, about 74 deals for over 1,945 acres are slated for residential development across Tier I, II, and III cities.
Prices upbeat in real estate
Puri said that the election year 2014 was a better year than 2019. Data indicates that in 2014, the average prices in the top seven cities rose by over 6 percent annually against the preceding year. As for 2019, average prices rose by merely 1 percent annually.
However, 2023 saw average housing prices rise by anywhere between 10-24 percent in the top 7 cities, with Hyderabad recording the highest 24 percent jump. The average prices in these markets stood at about Rs 7,080 per sq ft., while in 2022 it was Rs 6,150 per sq ft.
Housing demand continues to be upbeat across cities after the announcement of the election dates, with homebuyers remaining highly optimistic about the real estate market, Puri said.
Homebuyers rush to close deals
Kiran Kumar, Vice President of Hanu Reddy Realty in Bengaluru, told Moneycontrol that he saw a 15 percent increase (compared to January 2024) in homebuyers rushing to close the residential deals before the onset of the general election.
ANAROCK added that a majority of the current homebuyers are end users, not investors.
"End users will buy when they can afford the ticket price. That said, regardless of the election results, property prices are rising steadily and those who can afford to buy now will do so rather than risk paying a higher price later," Puri told Moneycontrol.
The incumbent government has been very clear on the incentives it offers homebuyers and overall sentiment will certainly find support in favourable election outcomes but are already upbeat anyway, he added.
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