The year 2022 was an incredibly record-breaking year for the real estate industry. On average, 3.64 lakh housing properties were sold in 2022. And also, the year 2021 was a flourishing year for the market.
According to CRISIL estimates, the real estate sector is likely to grow to ₹65,000 crores by 2024 from ₹12,000 crores in 2019, contributing 13% to the country’s GDP by 2025.
The low-interest rates, stamping reforms, low mortgage rates, and concessions from the government during the pandemic encouraged buyers to invest. But, now the tables are turning. With everything reverting to normal, experts are anticipating that housing prices will be skyrocketed in 2023 due to various reasons including the surge in raw materials, logistics, etc.
In this blog, we have discussed the various reasons for the rise in housing prices in 2023. Also, we’ve mentioned what experts have got to say about the rise in real estate housing properties.
Is 2023 the Right Time to Buy a House?
According to Amit Goyal, CEO of Sotheby’s International Realty, the real estate market has had the best time in 2021 and 2022 as well. Due to pricing options, loan interest rates, and government concessions, property sales hiked up.
It was back in 2014 when the sector hit the maximum number of sales. After a decade, the sector has experienced upheaval in the last two years.
According to the Housing Price Tracker Report 2022 – On average, the real estate housing prices across the top eight cities in India involving Delhi, Mumbai, Kolkata, Pune, Hyderabad, Chennai, Banglore, and Ahmedabad increased up by 6% YOY during the first three quarters in 2022.
Residence Vs Investment. What is Your Purpose? If you are looking to buy a residential property in 2023, then it is a wise move. Otherwise, if you are buying a second home for investment purposes, then you can postpone this year. However, you can opt for commercial properties, REITs, or something similar.
Reasons for the Rise in Housing Properties in 2023
Rise in Interest Rates
The repo rate has been updated by 125 points to 6.26% in 2023 so far. Since August 2018, this seems to be the highest repo rate. This implementation by the Reserve Bank of India has made the other nationalized and private bank revise their interest rates.
Property prices increased by 5-10% in 2022 but only at a slow pace. Lower home loan interest rates were a significant driver of real estate sales in both 2021 and 2022. If property prices had increased rapidly, it would have hindered the momentum of sales in those two years.
Demand for Housing Projects
“The increased demand in these couple of years may also be the reason for the price to hike up in 2023 and beyond, predicts experts. Ram Raheja, a real estate expert mentions, “The demand for home ownership has been consistently rising in 2022. And real estate did receive a growth impetus as it was a safe haven during the pandemic.
Also, people realized the importance of owning a home and a spacious living space. This will certainly lead to an appreciation of prices at desirable locations. The luxury housing segment is likely to appreciate due to the expectation of a surge in demand.”
People’s Interest to Buy/Invest in Properties
The chief sales officer of a real estate group, Mohit Ramsinghani says, “Moreover, real estate offers a great hedge against inflation, and most investors will concur that real estate as an asset is resistant to inflation’s negative effects.
Millennials, who earlier preferred to rent homes are now increasingly favouring residential properties. The value of the rupee has depreciated increasing the purchasing power of NRIs, and making them explore and invest in real estate in their hometowns in India”.
Demand Increase is Proportional to Price
While there is a rise in price for a product, it’s certain that the demand for the product too is high. This is the same case in real estate.
Kaushal Agarwal, Chairman of The Guardians Real Estate Advisory quotes, “Developers are currently operating on a thin margin and despite many challenges, property prices across the segment are still rationalized because they don’t want to hurt the positive sentiments and affect their liquidity”.
“Talks are being made with the government to immediately address the rising prices of the raw materials to curb the increased difficulties faced by builders and buyers”, added Kausal.
Let come what may be, property price increase/decrease, loan rates reduction/hike up, investing/buying in a real estate property is a lucrative asset. It can never be counted as a waste of money. With all these, we conclude that 2023 is of course gives a ray of hope to you to buy/invest in your dream property!