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The Indian real estate market went through a sea change in the year 2018. The various shades of the domestic market came on surface, where certain geographic pockets witnessed a dip in terms of property valuation and sales volume. And, certain pockets witnessed property price appreciation and sharp growth.
Impact of landmark regulatory policies such as RERA, GST and the Benami Transactions Prohibition Act along with demonetisation also changed the real estate landscape. ‘Affordable Housing’ was the buzzword for this industry in 2018, courtesy government’s schemes like Pradhan Mantri Awas Yojana (PMAY).
To understand the prospects of Indian real estate in 2019, we sat down for an interview with Aditya Mishra, Founder and CEO at SwitchMe Technologies. He talks about the highlights of 2018, performance of affordable housing schemes, and predictions for the housing markets in 2019. He also shares his views on the impact of 2019 General Elections and a crucial piece of advice for investors & buyers.
Let’s dive in!
Qn: How was the year 2018 for the real estate market in India? And why?
2018 has been a mixed bag. If you segment geographically, prices have been stagnant in real terms in most markets and have actually fallen in several markets. The one big exception has been Hyderabad. This has been bad for investors, but has been very good for home buyers. If you segment on the basis of property value, it’s the higher end, which has seen big drop in prices. At the lower end, the prices have been stable and there has been significant jump in volumes.
Qn: What’s your opinion on government’s ‘Housing for All by 2022’ mission and the various affordable housing schemes? Has there been any concrete impact?
It’s a great mission and the schemes have made a big impact. A lot of people have made their dreams come true, thanks to PMAY. It has also buoyed sales in properties with value less than 40 lacs. This has led to more investments in affordable housing from developers. We see developers specialising in affordable housing and also large national players moving their focus towards affordable housing.
Qn: Predictions for the housing markets of major cities, from developers and sellers point of view?
This year has seen strong surge in demand. In fact, in terms of volumes the first half of the year has been at par with 2015. However, prices have seen muted growth in some markets except Hyderabad, where there has been a healthy growth. For the next year, I expect NCR to see more volume and some price appreciation in the secondary market. Primary market will continue to be muted. Mumbai market will continue to see volume surge in Thane, Navi Mumbai and also the western suburbs. Prices will have an upward bias. Pune should see strong volume but stable prices. Bangalore will see some price growth amidst healthy volumes.
Qn: Huge unsold inventory was one of the major issues that real estate industry faced in 2018 due to demonetisation, RERA and GST and the amendment to the Benami Properties Act. Do you see that getting resolved in 2019 as things become more transparent and organized?
Launches have been delayed and that has led to some inventory being cleared. As inventory is getting cleared up, launches are starting to show up. Having said that, small property developers continue to find the market difficult. Their inventory is still stuck and may not get cleared for a long time as consumer preferences have shifted.
Qn: Would 2019 General Elections affect the real estate sector? If so, how?
General elections lead to extra cash infusion in the economy. That has an inflationary impact. In addition, there is increased pressure on government to waive off farm loans before the elections. Both of these (factors) would exert an upward pressure on interest rates. It would impact, to some extent, a home buyer and some demand dampening can be expected. Increased interest rates would hurt small developers and that would lead to consolidation being led by larger developers. Larger developers have been preparing for this by paying off debt or raising equity.
Qn: What are your expectations from the Union Budget 2019 that would come out in February, just before the General Elections? And, if the current government is replaced by a new government, how would it impact the budget, especially since the ruling government is already planning full budget and not vote on account?
Too difficult to say what a new government would do. However, I expect the last budget of this government to continue its commitment to the mission of housing for all. Thus, PMAY would continue. It would also get extra-budgetary allocation through funds raised directly by HUDCO and NHB. In addition, the GST rates may get cut to 5%. If that happens, it would be a big boost to real estate.
Qn: Should buyers and investors be concerned about something in the coming year?
I think both kind of buyers should pay attention to whether RERA has been notified or not and if it has been notified; is it the same as Central RERA. That has some impact on how things functions. We have seen buyers of both kinds not understanding the differences.
Qn: Will 2019 be a favourable year for – budget buyers, mid-size buyers or luxury buyers?
Real estate is a local business. Local demand and supply determine discounts too!
Qn: Lastly, any final words on how the real estate market will be identified by in 2019?
2019 would be the year where market will grow very healthily in terms of volume. It will be the comeback year for real estate.
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