The residential real estate market in India is poised for a significant upswing, fueled by positive sentiments among potential homebuyers regarding both the economy and their future earnings. According to the findings of our Residential Realty Consumer Sentiment Outlook survey, the combination of optimistic attitudes and the traditional festive boost bodes well for driving demand in the property market.
Key economic indicators in India, such as the manufacturing and services Purchasing Managers’ Index (PMI), have been consistently in the expansion zone. In August 2023, the manufacturing PMI reached 58.6, while the services PMI stood at 60.1. Although the services PMI is slightly below its 13-month high recorded in July, it remains above the crucial 50-mark, indicating growth, particularly in finance and insurance sectors.
The positive momentum extends to consumption indicators, with fuel, power, automobile sales, and Goods and Services Tax (GST) collections maintaining an upward trajectory throughout the first half of 2023. These indicators collectively paint a picture of a robust and expanding economy, setting the stage for a vibrant real estate market.
Our survey delves into the mindset of high-intent property buyers, revealing that 62% of them express confidence in their income for the upcoming six months. It is noteworthy, however, that sentiments have experienced a marginal dip compared to the January-June 2023 period. Despite this slight moderation, a significant majority of consumers (77%) maintain a positive outlook on the economic scenario for the next six months, with 34% expecting continued improvement.
Corroborating our findings, the Reserve Bank of India’s consumer confidence survey also indicates an uptick in sentiments regarding the overall economic scenario for both current and future expectations. While the positivity is palpable, it is important to note that sentiments, although strong, are slightly lower than the levels observed immediately after the second wave of the pandemic in the second half of 2021.
The positive economic outlook persists despite global uncertainties, including inflationary pressures and supply-side shocks. Notably, the trends identified in India align with the growth outlook outlined by international agencies such as the International Monetary Fund (IMF). The IMF maintains an optimistic outlook for both China and India, the two largest emerging market economies, projecting that they will contribute approximately half of global growth this year. Additionally, the Asia-Pacific region is expected to contribute a substantial fifth to this growth.
As India positions itself as a key player in the global economic landscape, the real estate sector stands to benefit from the prevailing positive sentiments and the festive season fervor. Homebuyers, buoyed by confidence in the economy and future earnings, are likely to propel demand in the property market, contributing to a vibrant and resilient real estate landscape. The coming festive season is anticipated to serve as a catalyst, further amplifying the positive sentiments and driving a surge in real estate transactions across the country.
Renuka Kulkarni, a seasoned real estate professional, brings over five years of diverse experience in research, consulting, and architectural design within the urban sector. Her expertise spans public and private projects, showcasing proficiency in real estate research, trend interpretation, and policy analysis. With qualifications in architecture and a master’s degree in Data Science (Business Intelligence & Data Analytics) from IIIT Bengaluru, along with an M. Tech in Urban Development and Management from TERI School of Advanced Studies, New Delhi, Renuka seamlessly blends data analytics with market insights, offering a holistic understanding of the industry in her research pieces.
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