10 things you should know about the impact of elections on the real estate sector


The real estate sector generally tends to ‘slow’ down during the general elections, there are few launches and investors opt for a ‘wait and watch’ approach. Having said that, the end-users may not be directly impacted as they may decide to purchase a house as and when they find the right project in the market and the best deal that suits their pocket.

The real estate sector generally tends to ‘slow’ down during the general elections, there are few launches and investors opt for a ‘wait and watch’ approach (Representational photo)

Real estate investors tend to become cautious when there is uncertainty surrounding election results and they anticipate possible changes to policy. There are fewer transactions and new launches during the elections, say experts, adding investors’ decisions during the elections may be dependent on the prevailing sentiment in the market, performance of the share market and even the impact the exit polls may have had on the markets.

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1 Elections 2019: The impact on the real estate market

During its first term (2014), the government had given an impetus to infrastructure development and undertaken major policy overhauls such as DeMo, RERA and GST, amended old Acts like Insolvency & Bankruptcy Code and the Benami Transactions (Prohibition) Act, and launched schemes like 100 Smart Cities, Housing for All by 2022, Make in India, AMRUT Cities etc. The last five (from 2019) years have witnessed the overall impact of their implementation on the real estate sector, say experts.

Also, during the elections in 2019, the primary and secondary markets did slow down and aspiring buyers and investors opted to wait and watch. The momentum picked up after the results and after buyers and investors were assured of the government’s thrust on creation of new infrastructure.

It should be noted that India’s residential real estate sector witnessed a major slowdown between 2016 to 2019. The major market shake-up brought on by policy reforms between 2016 and 2017 was followed by the NBFC crisis post the IL&FS issue in 2018. This caused considerable turmoil in the residential real estate industry.

Also Read: General Elections – Will the housing market witness another peak in 2024?

Anarock Research points out that there is enough indication that 2024 may witness another peak in housing sales and new launches.

2 Price trends over the last three elections

On examining the price trends during the last three election years, it emerges that 2014 was a better year than 2019. ANAROCK data indicates that in 2014, the average prices in the top 7 cities rose by over 6% annually against the preceding year – from 4,895 per sq. ft. in 2013 to 5,168 per sq. ft. in 2014. As for 2019, average prices rose by merely 1% annually – from 5,551 per sq. ft. in 2018 to 5,588 per sq. ft. in 2019.

Also Read: Real Estate trends: Five clinchers for a 100 crore property deal

3 Impact on homebuyers

While it’s true that many prospective homebuyers are waiting for the elections to get over before they take the plunge, experts point out that end-users will not be directly impacted by any such factor and will make a home purchase as and when they find the right product in the market.

“Only investors will wait and watch. Elections impact the sentiment of the market but do not affect the end-user much. So, if a buyer has located a property that’s populated, infrastructure has already developed, the price is right and all the fundamentals are in place, election or no election, he is bound to purchase it,” said experts.

For homebuyers, elections often are an end to fence-sitting and a confident move to ‘buy’ positions, said Anuj Puri, Chairman – ANAROCK Group.

The elections may impact markets where investors are in majority and the speculative element is largely predominant.

Investors planning to take ‘aggressive’ real estate buying decisions may prefer a ‘wait and watch approach’ but homebuyers will continue to buy depending on their requirements. An investor’s decision right now may be dictated by the market sentiment or the ‘feel good’ factor, performance of the capital markets as also whether the new government’s focus on infrastructure development will continue or not, said experts.

Elections impact builders as well. “Often the number of new launch announcements get reduced during the elections as in many cases the approvals may not come through on account of the code of conduct being in place. Having said that, the next quarter may see several projects getting launched across categories – mid-segment, affordable and luxury,” said a developer not wishing to be named.

4 How will election results shape the real estate sector?

A healthy absorption to supply ratio of 1.02 in 2022 has touched 1.17 in Q1 2024. With controlled launches and rising sales, especially in the high end and luxury segments, leading to a drop in unsold inventory, has resulted in a rise in prices as well, according to data shared by Anarock.

“The residential real estate segment is likely to create another new peak in 2024. This also indicates that the home buyers are optimistic of the real estate market’s performance,” said Puri.

5 Will there be a spurt in the number of new launches post Elections 2024?

The residential real estate market across the top 7 cities have already recorded a few benchmarks in the past few quarters. Quarterly launches cumulatively in these cities used to be north of 80,000 units per quarter in 2022. However, it has breached the 1 lakh units mark last year with each quarter recording launches in excess of 1 lakh units consecutively for the last 5 quarters. Major developers have already acquired land for future development which is 125% more than 2021, according to data shared by Anarock Research.

The unsold inventory has dropped to below 6 lakh units as of March 2024 with the inventory overhang to be just 14 months compared to 21 months a year ago. In the light of the above, there is scope for launches to rise across segments, it showed.

6 Would these new launches be in the mid segment, luxury or affordable segment?

Launches in the mid-segment and high end have been dominant and account for more than 55% of the total supply. It is also noticeable that the share of luxury and ultra luxury segments are also rising and account for nearly 25% of the total supply as of Q1 2024. “The new launches are mainly to be spread across these segments,” said Puri.

Pradeep Kumar Aggarwal, founder and chairman, Signatureglobal (India) Limited is of the view that the new launches going forward will be across all segments.

7 Will housing prices remain stable or increase going forward?

Reducing unsold inventory and sales exceeding supply and rising input costs, are the key ingredients that are likely to drive prices going forward. “We have already witnessed annual price rise in the range of 10% to 32% across various cities,” said Puri.

8 Should homebuyers make a decision to buy homes now or wait?

Unless homebuyers are waiting for a luxury or high-end product at a location of their choice, by a preferred builder or a specific layout, view or orientation, the average homebuyer should evaluate the available options carefully and close the deal by negotiating for the best offer.

9. Impact on commercial real estate

The country’s anticipated GDP growth from $3.5 trillion to $7 trillion by 2030 can be sustained without significant changes in circumstances. “This sustained economic expansion will enhance India’s appeal to global corporations, firmly establishing its position as a prominent hub for launching Global Capability Centres (GCC) and manufacturing facilities. Such ongoing growth will significantly impact the construction sector and improve employability,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India.

10. Affordable and rental housing

Baijal hoped that the new government would create more demand for the affordable housing segment, which has experienced a persistent decline. This can be achieved by maintaining favourable interest rates and other enabling conditions. “We hope that the government will take a closer look at demand for rental housing policy as well as providing more incentives to the supply side for affordable and rental housing,” he told HT Digital.



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