Real estate has long been regarded as a stable and lucrative investment option. Its lasting worth and the opportunity it presents for building wealth continue to attract investors to the sector, surpassing the prospects offered by other investment avenues such as gold, fixed deposits and the stock market. Not surprisingly, our recent consumer survey for the upcoming six months indicates that this sentiment remains unchanged among investors.
According to the survey findings, 48 percent of respondents expressed a strong desire to invest in property, citing its reliability as a hedge against inflation and a proven wealth-building tool.
The resurgence of interest in real estate, particularly in the residential segment, can be attributed to a positive shift in sentiment toward homeownership following the uncertainties brought about by the COVID-19 pandemic. Let’s explore some of the key reasons behind the increased attention towards real estate and the growth of the property market in the first half of 2023.
The Pandemic Effect: Renewed Interest in Homeownership
The COVID-19 pandemic brought about unprecedented challenges and uncertainties, which led many individuals to reevaluate their priorities. One of the most significant shifts observed during this period was the renewed importance placed on owning a home. The concept of a secure and comfortable living space became a top priority for many, prompting a surge in demand for residential properties. This positive home buyer sentiment has been a driving force behind the growth of the real estate sector in the recent period.
Steady Growth in the Residential Property Market
The residential market in India has shown remarkable resilience and sustained growth throughout the first half of 2023.
Both new supply and sales in the primary residential market recorded impressive double-digit growth rates of 44 percent and 15 percent year-on-year, respectively. While the new supply of properties touched a decade-high number in H1 2023, sales figures were the highest since the same period in 2019.
This surge in demand and supply is a testament to the robust nature of the Indian real estate sector.
Rising Property Prices
As demand for residential properties continues to rise, property prices have also experienced a significant uptick.
The weighted average residential prices have increased by an impressive 6-7 percent. Markedly, prime localities in cities such as Gurugram, Hyderabad, and Bengaluru have witnessed double-digit growth in property prices.
This increase in property prices has not only attracted end-users but has also reignited the interest of investors who were previously cautious due to a slowdown in demand. The promise of better returns in this upswing market has once again made real estate an attractive investment option.
Resilience in the Face of Rate Hikes
Another major factor augmenting the sector’s appeal is its undeterred growth, even in the face of consecutive rate hikes by the RBI. The fact that the real estate sector has continued to thrive amidst these rate hikes is a testament to its strength and appeal. Investors and homebuyers alike seem to have faith in the long-term potential of real estate as an investment.
Conclusion
Thus, in a world of financial uncertainties, real estate had stood out as a stable and reliable investment option, as presented by the survey data with more than half of the respondents deciding in favour of the sector. The renewed interest in homeownership, coupled with impressive growth rates in the property market, has made real estate an attractive choice for both investors and homebuyers. As we move forward, it is clear that real estate will remain a resilient and promising asset class, offering stability and growth opportunities for those who choose to invest in it.
