Festive Season to Intensify Demand in Last Quarter of 2023

Potential homebuyers are expected to leverage the festive season to make property investments, thereby driving demand and potentially propelling property prices forward

File photo
File photo

In an ever-evolving real estate landscape, keeping a pulse on the price outlook for residential properties is crucial for both, homeowners and prospective homebuyers. So, let’s understand which factors will influence the last quarter of the real estate market.

Possibility of a price hike: As the festive season has kickstarted, industry experts are anticipating a slight uptick in property prices. “Though not sudden, the remaining year will see a gradual increase in house prices aligned with typical seasonal trends during this period,” says Mayank Ruia, founder and CEO of a real estate firm. Moreover, potential homebuyers are expected to leverage this period’s cultural and religious significance to make property investments, thereby increasing demand and potentially propelling property prices forward. “I anticipate that prices will increase by approx. four to five per cent in the next year, and then stabilise to some extent. The movement of home loan interest rates will play a significant role in this. Developers need to consider overall affordability to ensure their properties remain attractive and within the market range,” says Akash Pharande, managing director of a real estate company.

Ruia adds, “Elevated interest rates result from high inflation rates, as they are an important tool in monetary policies to fight inflation. Sadly, high interest rates make it costlier for aspiring homebuyers to afford homes as they need more money for financing. Moreover, when interest rates are high, the housing market faces tough competition from other investment options.”

Demand and supply: The relationship between demand and supply is a critical factor that significantly contributes to the pricing of residential properties. “As urban centres expand and employment opportunities increase, the demand for housing in well-connected and desirable locations rises. Simultaneously, the supply of new residential units is influenced by factors such as construction activity, land availability, and regulatory policies. When demand outpaces supply, there is upward pressure on property prices due to the inherent scarcity of available units. Therefore, the interplay between demand and supply remains a fundamental determinant of residential property prices, shaping the price outlook for the remaining months of 2023 and beyond,” says Ayushi Ashar, member of the managing committee of CREDAI-MCHI.

Affordable housing takes a hit: Due to inflation and the growing demand for mid and luxury housing, the affordable housing market has suffered a setback. According to a recent survey by Anarock Group, the demand for affordable homes has decreased to just 25 per cent in the current period. The demand for homes priced at Rs 40 lakh has declined from 40 per cent in the second half of 2020 to 28 per cent in the first half of 2022, and further dropped to 25 per cent in the first half of 2023. The report suggests that inflation and the economic slowdown have disproportionately affected this target audience, prompting them to take a cautious ‘wait-and-watch’ approach. “While there is a strong demand for mid-range and luxury properties, affordable housing has been negatively impacted by increasing prices. Inflation and interest rates have hit lower income groups the hardest, making homeownership less affordable overall,” concludes Pharande.

https://timesproperty.com/news/post/festive-season-to-intensify-demand-in-last-quarter-of-2023-blid5681