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General Elections - Will the housing market witness another peak in 2024?
All signs currently favor 2024 witnessing another peak in housing sales this election year with real estate regulations in place and high homebuyer demand
General elections and residential real estate appear closely linked. With most real estate regulatory reforms in place and high homebuyer demand, there is enough indication that 2024 may well witness another peak in housing sales and new launches, an analysis by Anarock Research has shown.
Based on growing homebuyer demand, real estate developers have closed substantial land deals in the last one year, and most of their balance sheets are clean. Many large developers with good track records and solid balance sheets are venturing into new territories to increase their presence, it said.
In 2014 and 2019 - both election years - saw housing sales create new peaks. In 2014, sales in the top 7 cities scaled up to approximately 3.45 lakh units while new launches were the highest ever at nearly 5.45 lakh units.
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Likewise, in 2019, housing sales scaled up to approximately 2.61 lakh units while new launches increased to approximately 2.37 lakh units after a lull in the residential real estate market between 2016 and 2019. Major structural reforms like DeMo, RERA, and GST, introduced in 2016 and 2017, transitioned Indian real estate from something of a Wild West frontier market to more organized and regulated, it said.
Also Read: Real Estate Update: Housing sales up 26%; 2.71 lakh units sold across top seven cities in 2023
Most fly-by-night developers have exited the market since then and organized players have emerged in strength, significantly reviving confidence among homebuyers, it noted.
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"A major factor driving the housing market's phenomenal performance in 2014 and 2019 would have been the decisive election results. For homebuyers, it was an end to fence-sitting and a confident move to 'buy' positions," said Anuj Puri, Chairman - ANAROCK Group.
Also Read: Haryana RERA revokes registrations of five real estate projects in Gurugram
Housing price trends
On examining the price trends in these election years, it emerges that 2014 was a better year than 2019. ANAROCK data indicates that in 2014, the average prices in the top 7 cities rose by over 6% annually against the preceding year – from ₹4,895 per sq. ft. in 2013 to ₹5,168 per sq. ft. in 2014. As for 2019, average prices rose by merely 1% annually – from ₹5,551 per sq. ft. in 2018 to ₹5,588 per sq. ft. in 2019.
India's residential real estate sector witnessed a major slowdown between 2016 to 2019. The major market shake-up brought on by policy reforms between 2016 and 2017 was followed by the NBFC crisis post the IL&FS issue in 2018. This caused considerable turmoil in the residential real estate industry.
Impact of Covid-19 in 2020
From 2019 onwards, the first green shoots of revival were temporarily dampened by the pandemic in early 2020. Thereafter, against all expectations, the housing market went into overdrive from 2021 onwards and the momentum continues till date.
How will the current election year (2024) pan out for the Indian housing market?
"As things stand now, all signs currently favour the residential market in 2024, and the year can well create another peak in housing sales and new launches," says Puri.
"Housing demand continues to be upbeat across cities after the announcement of the election dates, with homebuyers remaining highly optimistic about the real estate market," he added.
