The main factor for investors being inactive and fence sitters in real estate was the prolonged slow down for the past three years. Investors also had their reasons to justify their inactiveness. Economic imbalance, political uncertainty, unclear land acquisition laws, worried home loans are some of the factors that kept investors at bay of real estate.
Today, as we know, almost all of these factors which had been pulling us back from real estate, has now started attracting considerable investors into real estate. Even though a real estate boom is advertised widely all over the market, majority of investors believes real estate is still in its slump stage. But real estate is certainly behaving as a much favourable asset class of investments than it was three years ago.
- The problem of unsold inventory is still prevailing in the market. But as an antidote, the accumulation of demand due to lower investor demand for the past three years will soon rule out the problem, once the sales pick up. We can widely expect the sales to pick up because the market indices reveal that the property prices today are the same as it was three years ago.
- Even if prices have hiked in some of the locations, it is quite marginal. It was the one of the major claims for investors that they are waiting for a prices correction. In fact, if we cross check various markets today we can analyze that prices have self corrected.
- Real Estate Regulatory Bill has been implemented from May 2016, which will regulate the centuries old sector and bring clarity and credibility. It also safeguards the interests of buyers as well as developers.
- The CPI inflation rate was recorded 4.83 % year-on-year in March, 2016, after 5.26 % in February. However, in April the rate is recorded at 5.39%, slightly higher. Even then, in a long term perspective, surveys has projected inflation rate at 3.80% in 2020.
- Per capita income has rose significantly over the past three years. The 7th pay commission report has also projected an increase in salaries for government employees, which means that people will have more money in their hands to invest. In addition to that, authorities also ruled that the entire PF can also be withdrawn for housing purposes.
- Coupling the attraction, RBI has reduced home loan interest during their first monitory policy meeting in April, following a series of rate cuts last year. If the inflation can be checked further, then we can expect the apex bank to initiate further more rate cuts for home loans as part of their accommodative stand.
- The economic growth is prevailing through the all time best since the new administration has come up in the centre. The GDP has also touched fair mark, which is further expected to reach 8% in this financial year. This can also contribute to the fairplay of real estate.
- After several years of sluggish monsoons in a row, Skymet has predicted an ‘above normal’ monsoons this year, which is indeed a good news to boost up the consumer sentiment.
- Trade deficit has been narrowed, FDI investments are flowing significantly, Smart Cities is expected to cross more than 100 cities, stock markets are faring well and more infrastructure developments planned for NHAI and Railway will all together provide the impetus for real estate sector.