Indian realty sector has witnessed tumultuous events in recent years. However, the sector showed huge resilience by adjusting to the policy changes such as demonetization, GST introduction, RERA/HIRA compliance and came out stronger.
We foresee an improved working of the realty sector in the future which will tremendously help the homebuyers. In fact, we expect the housing market to remain a buyers’ market in the foreseeable future. Better transparency, innovative products, enhanced compliances, and timely delivery is what we expect to consolidate further in the real estate industry.
What are the changes homebuyers can expect from the property market in 2021? Let’s dig deeper.
Home Loan Interest Rate is the Lowest Now
The home loan interest rate is the lowest in the last 15 years and although we expect that the interest rate will remain benign for some more time, it may slowly inch up as the economic cycle turns up finally. Inflation is the major risk factor and it is benign in the winter but generally starts going up after the winter. If inflation goes up considerably, the interest rate is likely to go up.
We do not foresee any further dip in the interest rate from hereon as inflation is not likely to reduce any more from here.
Homebuyers are taking advantage of the lowest EMI per lakh in a long time. However, this scenario is not likely to last forever. Buyers planning to benefit from a low-interest rate regime must hurry up to complete the transaction without waiting any further.
Prices of Building Materials are Likely to Go up
There are already signs that the prices of building materials such as steel and cement will appreciate in the near future. As the economy gathers further momentum, prices of commodities and raw materials will increase further.
The increased prices of raw materials will definitely put pressure on the developers to escalate the property prices. This will ensure that the EMIs will go up, although gradually.
Developers’ Brand Equity will be the Major Determinant
Enhanced requirement of transparency, compliance, and quality execution parameters under RERA/HIRA have put a lot of small-time, unorganised sector developers under tremendous pressure. Some of them have failed to sustain and are unable to continue.
This consolidation is likely to accelerate further in the property market in 2021. This will actually help the homebuyers as organized, well-funded developers with superior reputations will dominate the market. The chance of homebuyers getting duped by unethical developers will further reduce.
In fact, homebuyers can now research on the internet and look for developers for better quality scores. Peer reviews, ratings, social media comments, Google reviews will continue to influence the homebuyers even in 2021.
Property Prices will not Reduce in 2021
Although we do not foresee any runaway inflation in property prices, higher raw material prices and enhanced cost of funds will ensure that it will reduce.
There has been a benign property price (and home loan rate) regime for quite some time now, and this has immensely helped the homebuyers. Homebuyers waiting for any further reduction in property prices will most likely be hugely disappointed.
Affordable Housing will Get a Boost
The economy is on an upswing after the nightmare of Covid-19 is all but over. However, the workers’ earning scenario and new job creation are still stressed in a few sectors of the economy.
This, coupled with the focus of companies to continue with ‘work from home’, will ensure the higher interest of homebuyers in affordable housing. The trend will ensure the growth of fringe areas in our cities in tandem with better infrastructure and connectivity. In cities like Kolkata or Hyderabad, the expansion of the Metro network will bring more of such areas into property hotspot zones.
Even in tier 2 and tier 3 cities, property development will receive a boost and reduce the pressure of large cities’ infrastructure to a considerable extent.
Demands for Amenities will Get Reprioritised
The entire episode of the pandemic has helped us to reprioritise our choices. The stress of homebuyers on healthcare, wider individual spaces, and security is here to stay.
Superior facility management of gated communities with improved cleaning protocols, water purification, and hygiene will remain preferred.
As the focus will be on essentials in affordable homes, some of the amenities which offer only ‘vanity value’ may be compromised by the homebuyers.
Overall, we expect that the demand for properties will remain robust in 2021 and homebuyers will get the best out of these trends.
