Post elections; is it a good time to buy real estate in India?

The general sentiment was thus quite negative to take on the long term liability of a home loan. It forced many buyers to postpone their decision to invest.

June 24, 2014 2:27 IST | India Infoline News Service
The last decade has been a roller-coaster ride for the real estate industry in India.Consumers have been on tenterhooks, hoping for reductions in property and mortgage rates. And the wait has been long.

Adding to the situation was the world economic collapse, apart from the policy paralysis. Earning potential was affected and job stability was also a concern. The general sentiment was thus quite negative to take on the long term liability of a home loan. It forced many buyers to postpone their decision to invest.

The developer community too has been facing problems like the multiple-window approach for approvals for development. This is especially so for the Ministry of Environment & Forest and Aviation,that can take anywhere between 18 to 40 months, escalating project costs and cost of borrowed funds. Dipping property rates clubbed with freebies also failed to lure the buyers, resulting in an increased inventory or in some cases undeveloped/delayed projects for the developers.

"The two major factors affecting property prices - stable governance and improving economic scenario - now seem to be a reality. The Ministry of Urban Development, Housing & Urban Poverty Alleviation has already initiated some important changes like granting of infrastructure status to low cost housing and working towards reduction of home loan rates to single digit. These proactive actions have improved the builder-consumer confidence," saidPrajapati.

"Hopefully, the real estate regulatory body and the one-window clearance scheme for developers will be implemented soon, bringing in accountability for the developer community and transparency forconsumers," added Prajapati.

The Ministry of Environment & Forests has as a first step, started the process of issuing environment clearances online within stipulated time limits at every stage. This is a welcome start towards bringing some discipline to the process of getting environmental clearance for projects, thus reducing project costs.

"With a stable and strong government at the centre and the soon to be announced federal budget, spirits are now running high, and hopes of an economic revival are becoming more believable," said Prajapati.


The real estate pricing is bound to improve. Real estate pricing, globally, is affected by four important factors like economic stability (employment), interest rates, consumer confidence and supply. With the focus on development, the newly formed government has already made its intentions known on lowering interest rates, creating low cost housing, job creation and improving consumer confidence. With demand thus generated, the real estate pricing is bound to increase across metro's and Tier-II locations.

The Housing Sentiment Index (HSI) has indicated an increase in property rates across eight cities in the coming six months after elections. Similarly, a research done by an independent French market research company has indicated that nearly 57% of Indians think that this is the right time (30 days) tobuypropertyinIndia, backed by the formation of the new government, indicating positive sentiments of growth.

Rajesh Prajapati, Managing Director of Prajapati Developers

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