Trends that will shape the housing market in 2017

They say that if any economy has to increase its velocity, real estate sector serves as its rocket fuel. Though in the year 2016, real estate didn’t do much heavy lifting due to numerous reasons like the real estate bubble, demonetisation, tight lending standards, etc.; but there are signs that these trends are about to change. The year 2017 is expected to bring in a fresh start and we feel that the following trends should be watched: 

Home loan rates: Post demonetisation, the interest on the home loans have fallen and are expected to fall more in the current year. This will relatively support the prospective home buyers to be able to afford the home of their dreams.

More new homes: While the data on new home construction showed that builders pulled back on new projects in the past few months, the overall trends in home construction looks positive in the coming months. There has been an increase in demand from buyers. Gone are the days when the investors used to invest only in metros’ and Tier 1 cities. The younge buyer is getting attracted towards Tier 2 and Tier 3 cities, where the professional opportunities may not be as large as in Tier 1, but housing is affordable.

Increased NRI Investments: There is an increased interest from the NRI buyers who are looking for safe places to invest their hard earned money. India is attracting growing amounts of foreign capital and the ease in the regulatory environment has made the process much more easier and hassle free.

Prices will continue to rise, but slowly: Prices are expected to climb, but at a slow rate. The reason being that now the home buyer demand is stronger than it was last year. With the consumer confidence coming back supported by affordability schemes and trends, the home sale prices can gain up to 5.1 % in 2017 compared to 2016.

Experts have shared that the current slowdown in property sales will be short-lived and things will start improving. Decisions and actions by the government like The Benami Transaction Act, the Real Estate Regulation and Development Act 2016 (RERA), etc. are all in the same direction. While buyers will have benefits like the assurance of a dedicated governing body, timely project completion, complete information on the project and amenities promised, etc.; the builders will have to work by keeping in mind the timelines and penalties!

Though there is still a lot of confusion among home-buyers and real estate stakeholders post demonetisation, the activity in the market is slowly picking up. Developers keen to revive buyer interest in the market by offering several schemes. Loans at 6% and 7%, offers like ‘book now and pay later, assured adjustment of compensation if prices fall further, etc are some initiative taken by the developers to attract the buyers. The Budget 2017 has been successful in encouraging the first-time home buyers. If we look at the maths, the provision of limiting the tax exemption on interest for even rental homes to just Rs 2 lakh, the investor interest has decreased. Thus, it will increase the housing supply in the secondary real estate market, bringing down the prices, which have already fallen post-demonetisation. On the contrary, a lot of people from the real estate fraternity feel that currently the primary market is full of unsold inventory, such decisions will add the secondary market to this list. The infrastructure status to affordable housing has been a big relief to the developers as it will ensure them cheaper loans. With a lot of our population willing to invest into the affordable housing category, this trend will be the top highlight for Real Estate in 2017.