The year 2014 was a lethargic one in the real estate market sector. The high interest rates and political uncertainty were the two main reasons behind the inactivity of buyers towards property purchase. Home buyers postponed their purchases for the entire year, which is why the number of unsold properties increased over the year, which in turn increased pressure on the developers. This is the reason why developers started putting up alluring offers like gold coins and easy payment plans to attract customers. Mumbai and Delhi saw the highest number of piling inventory.
This year i.e. in 2015, with the rising GDP growth, economic activity is picking up speed. The GDP is expected to rise by 6.5 % in the next financial year. An increase in the number of jobs in the corporate sector has also been observed this year. Thus, with improving business standards, the demand for commercial and office space is definitely going to see a rise. Slowly and gradually, even the demand for residential property will start increasing. This can be said because this year, there has been a positive change in customers’ attitudes towards property purchase and there have also been interest rate cuts. The reduction in interest rates for home loans has been a huge factor for this changing attitude. If the property prices stay stable and the interest rates stay low, it will definitely attract the middle class buyers.
Another major reason that will change the way properties are bought and sold is the implementation of the ‘Real Estate Regulation Bill’, which has been made to govern contracts between real estate buyers and sellers. Until now, buyers were compelled to abide by the one-sided contract terms, sky-high prices, uncertain plan changes and delay in deliverance. But with the implementation of this Bill, the records of projects, promoters, agents and violators will be maintained by the ‘Real Estate Regulatory Authorities’. Before a developer launches a project, he will have to register his plan with every tiny detail with the authority for approval. If these terms are violated, the developer will be highly penalized. The developer will also be required to keep 50% of amount received by customers in an escrow account, which will be used only in the development of the project. Thus, there will be complete transparency and security towards the customers, which will uplift the real estate market activity.
There has been an increasing demand for affordable housing and townships this year, and the demand is expected to rise even next year. The government is also working towards establishing 100 smart cities across India. This idea compelled the ‘Land Acquisition, Rehabilitation and Resettlement Act’ to ease off some of its provisions like those related to rise in compensation to original inhabitants and rehabilitation clauses.
With all these factors and the number of developments taking place in the real estate sector, it seems like the property market in India is expected to significantly improve by the end of March 2016.
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