Should we hope for Rise in Real Estate post general Elections ?

Real estate sector has another reason for eyeing the general elections results, which is, expecting to make big business from property buyers! It is very clear that property buyers and developers are very anxious about any action taken by the existing government. A general election is the only time which tells whether real estate market will prosperous or remains intact.

 For the coming next few years the next government’s employment and economic strategies will have greater impact on the growth of real estate sector. Since the last two years were not good for the Indian property market, recovery has become very essential. Developers are expecting a positive response post-poll. But so far none of the campaigns found success in defining a comprehensive offer for retrieval of the real estate market.

 The real estate market is the main financer for elections; developers provide funding to politicians for financing their respective campaigns before the polls. This time slump in the housing absorption has negatively affected developers’ liquidity, as a result In order to support elections; many developers are postponing their projects and cutting down on new launches.

Though there is assumption that property prices will raise post elections but election results do not make or break a market, they do affect market opinions.

 Post elections, if the revival is unobstructed, we may see a large number of property buyers re-entering the real estate market. Political uncertainty surely has a noticeable effect on the Indian property market, and it is also not easy to isolate that political uncertainty from larger economic elements like interest rates and job creation. A superior image of infrastructure will help make the market more cheerful and flexible.

 Currently the key aspects to think about Indian real estate are unsold inventory, absorption and interest charges. Irrespective of which party wins, all these aspects will not change overnight post elections. Over the period of time, what will matter most to the real estate market are FDI in housing, REIT legislation’s and the effective execution of Real Estate Bill. The Reserve Bank of India will also have an important role in the post-election situation, whether it reducing interest rates for home buying, or permitting flexibility to bring back endowment schemes, or reorganizing debt for debt-ridden developers.

 Certainly, a new established government will increase businesses and boost investor’s buoyancy. However, at least for a year the real effects of any changes will not get revealed in the economy. A perfect recovery can happen only with the combination of low interest rates, bottomed-out property rates, and a regain in buyer’s confidence. If the upcoming new government is capable of keeping low interest rates and high employment opportunity, it can provide the right platform for a steadier and investment-friendly real estate market.