IGI Logo

The political atmosphere in India has a big impact on the property market, just like it does in other countries - especially during general election seasons. Election cycles have had a discernible impact on the real estate market over the last twelve years. What should end users and investors expect after the forthcoming general elections? Let's examine the behavior of the Indian housing market before and after general elections.

Trends Ahead of the Election

In the past, we have seen that the Indian real estate market tends to slow down in the run-up to general elections. This is because buyers and investors become cautious when there is uncertainty surrounding the results of elections and possible changes to policy. Pre-election data usually shows a trend of lower transaction volumes and reduced rate of property price rises.

For example, the market saw a notable decline in sales and new launches during the 2014 general elections. The top seven cities in India had an almost 30% drop in home sales in the quarters preceding the elections. Similar patterns were seen in 2019, with the primary and secondary markets slowing down as aspiring buyers and investors  opted to wait and watch.

Recovery Following Election

The housing market usually rebounds markedly after elections. Clarity on government policy and restored consumer confidence are often the driving forces behind this rebound. Following the 2014 elections that resulted in the arrival of a stable government, there was a notable upturn in the market. Positive consumer sentiment and increased investment caused an almost 50% increase in sales in the following months, according to reports.

These patterns were repeated in the 2019 elections. Again, the reviving market momentum was supported by the guarantee of political stability. Another factor at play was that people now had confidence in the Real Estate (Regulation and Development) Act, or RERA. By the end of 2019, new investments were flooding the market, not only in the residential space but also in commercial real estate.

Current Market & Future Outlook

This year, the housing market in India has remained resilient even in the period of uncertainty before the general elections. The current government has taken several measures to increase housing demand, infrastructure development, and economic reforms. A general confidence that this government will continue to remain in power has provided considerable protection from the typical pre-election downturn.

After the election, the Indian housing sector has every reason to remain upbeat. The market will definitely rise if the parrty in power can maintain policy and safeguard economic stability. There are also industry expectations that the GST applicable on  building supplies may be moderated with upcoming regulations. This would prove to be a big shot in the arm for both developers and their customers, as will help keep property price rises in check.

Apart from that, there are expectations that the availability of financing for the housing sector may improve, and that affordable housing once again becomes a priority sector for the government. All this will certainly contribute to steadily improving housing market dynamics.

Implications for Investors

The post-election phase will deliver very attractive opportunities for both buyers and investors of residential real estate. Once the government announces more measures to boost the market and stabilize the economy further, real estate will rise and yield very significant returns due to price appreciation and increased demand. Such measures will dovetail very well with the growing trend of digitization and transparency in real estate transactions.

Above views are of the author and not of the website kindly read disclaimer