With 2024 on the horizon, India's real estate and housing markets are bracing for significant innovations to serve changing homebuyer needs. With rapid development and expansion, India's real estate property has emerged as a thriving pillar of the national economy. Ongoing urbanisation coupled with rising incomes has fueled towering demand for housing across India. Moving forward, the country's dynamic real estate sector appears set for a period defined by creative transformations intended to satisfy contemporary homebuyer expectations. The outlook is bright for residential real estate as developers gear up to build homes that cater to modern lifestyles and preferences.
India is forecasted to undergo robust property price growth nationwide over the coming years, led by its largest cities. The average property prices are projected to increase by 6% in 2023 and 2024. As per the survey, rates in major metros like Mumbai and Delhi, with its proximate National Capital Region, should rise 4-5% annually over the next two years. Additionally, the tech hubs of Bengaluru and Chennai are expected to see around 5.5-6.5% price appreciation through 2024. Continue to read this blog before purchasing a property or investing in real estate.
Key factors that generally impact the housing market include:
Demographics
The number and types of people living in an area affect what kind of homes are needed and wanted. When people move to a new place, more homes are needed to live. This can cause housing prices to go up.
Incomes make a difference too. Wealthier households can afford larger, more expensive homes. Poorer households need smaller, cheaper housing. If incomes rise in an area, more buyers can afford higher-priced homes. Falling incomes mean fewer people can buy houses or residential property unless prices drop. Who lives in a place and how old they are, whether they are singles or families, and how much money they make all shape what types of homes people need. Tracking these demographics helps predict what will sell in an area. So demographics have a big impact on housing property markets.
Interest Rates
Interest rates can have a major impact on the trajectory of the housing market as we head into 2024. This is because interest rates influence the cost of borrowing for homebuyers and therefore affect affordability and demand dynamics in the real estate market.
When interest rates rise, the cost of financing a home through a mortgage increases. Higher mortgage rates reduce overall home affordability, pricing some potential homebuyers out of the market entirely and cooling demand for housing. On the other hand, declining interest rates make mortgage financing cheaper, which improves affordability and spurs greater home-buying activity. The direction of rate moves by the Federal Reserve will thus be a key factor shaping the vigour of the housing market.
The Economy
Another major factor value of real estate is the overall health of the economy. The value of homes or real estate is influenced by the state of the economy. Economic indicators like GDP, employment data, manufacturing activity, and the prices of goods help measure the overall health of the economy. When the economy slows down, it affects the real estate market negatively.
In a strong, stable economic environment, incomes tend to rise, job security is higher, and consumers are more optimistic and willing to make major purchases like homes. Robust economic conditions encourage more people to enter the housing market, drive up transaction volumes, and put upward pressure on the market value of the property. On the other hand, a deteriorating or uncertain economic outlook has the opposite effect. Slowing growth, high unemployment, and declining wages undermine consumer confidence and discourage major expenditures. Even employed homeowners may delay selling or upgrading homes under weak economic conditions.
Government Policies and Subsidies
Government policies and subsidies that reduce homeownership costs, such as tax credits or deductions, can stimulate demand and impact the 2024 housing market. However, being aware of expiring policies allows insight into artificial versus fundamental market trends. Tracking relevant bills and proposals helps real estate professionals contextualise and predict impacts on property values and sales from government legislative action.
Supply and Demand
The housing market follows the economic model of supply and demand. Limited housing inventory plus high buyer demand creates a seller's market with rising home prices. Abundant supply and weak demand cause a buyer's market with falling prices. Tracking supply and demand fundamentals provides insight into housing market conditions and price outlooks.
Final Thoughts
The housing market is still firmly in sellers' territory in 2023 and is projected to remain strong through 2024, though price appreciation may moderate from the rapid pace seen in recent years. As mentioned above, key factors like demographics, low mortgage rates, and ongoing supply limitations will continue to support demand and home values. With the ongoing surge in home demand, it is essential for individuals to weigh the factors influencing home values and the present housing market scenario when making informed purchasing decisions.