Will property prices go up, stay stable, or fall this year? Perhaps, this is the most persistent question in the minds of real estate investors and end users as 2016 begins.
Most of the elements which significantly contribute to the market dynamics of the real estate sector, point out to the beginning of a positive phase in 2016, resulting in picking up of sales and overall improvement in this industry. Some major pointers in this regard have been summarized below:
Realistic Property Prices
The year 2015 proved to be a turbulent year for the real estate sector, with inventories piling up with almost all developers in India. But these unsold units have forced the developers to reduce their selling prices, resulting in a correction in costs of all segments of the realty sector. Hence, it can be inferred that the bubble of unrealistic prices has burst, with no scope left for further reduction of prices, or we can say that prices are at their rock bottom at the moment. The present stable and realistic prices gives a big reason to investors for buying property in 2016, providing the much needed trigger.
Easy Availability of Funds
The rate cut of 50 basis points by the RBI in its September monetary policy review has reduced the interest rate on home loans, due to which the funds are available at lower rates. Moreover, the implementation of the 7th pay commission will give substantial purchasing power to Government employees, with some funds flowing towards buying their first or second home at today’s genuine property prices. Also, the banks are stepping up efforts to provide easy and fast home loans.
Positive Regulatory Changes
Government has initiated a host of regulations for improving the sentiment of real estate sector. The relaxing of norms of foreign direct investments will see a surge in FDI in this sector helping in completion of projects in time. Moreover, the impending Real Estate Bill will be a means to regulate this huge industry by acting as a deterrent to those builders who get involved in unhealthy practices. The regulation will act as a protector of the buyers’ interests, prompting them to invest further, helping to jack up the sluggish demand of this sector.
Improved Market Sentiment
Prime Minister Narendra Modi’s announcement of 100 Smart Cities Mission, Atal Mission for Rejuvenation and Urban Transformation of 500 cities (AMRUT), as well as the ambitious target of housing for all by 2022, have drastically improved the market sentiment, with every common man thinking himself close to buying his dream home.
Along with the above factors, the latest data on investment inflow, improvement in sales of unsold inventory, and proactive efforts of protecting consumers’ interests by builders, point towards a definite optimism and emergence of a positive phase for the real estate industry, as 2016 progresses.
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