The Indian real estate sector is at an exciting down. After surviving the COVID-19 storm, it faced new challenges in 2022. Rising input costs, the current geopolitical situation, and rising interest rates are all issues that the sector had to face. Besides, the IMF forecasted that India's economic growth would slow to 6.8% in 2022, from 7.4% in July to 8.2% in January.
Following a record-breaking increase in property prices in 2021 and 2022, as well as a rise in mortgage interest rates to their highest level in 20 years, some factors may influence home buyers in 2023.
1. New Technologies
The luxury market was the main driver of real estate growth in 2022, which is expected to continue in 2023. There will be a rise in demand for larger, luxury houses because of the growing popularity of WFH and hybrid working models. Despite rising home prices, there is still a strong demand for homeownership. Younger and first-time homebuyers will dominate the real estate market. Commercial real estate is also showing signs of expansion. By 2023, the organised retail real estate stock is expected to grow by 28% to 82 million square feet. Global headwinds have inspired NRIs to invest more in Indian real estate. This has become a trend because the Indian rupee has depreciated, and the economy is doing well. Residential real estate investing has increased due to urbanisation and rising household income. India is one of the top ten fastest-rising housing markets in the world.
2. Government Policies
Government policies can also have a great impact on the property market. For example, if a government initiative increases the availability of affordable mortgage options, it can make it easier for people to buy homes and could lead to increased demand for properties. Whereas, if the government announces policies like raising taxes on property purchases, it will negatively affect people's purchase decisions to buy homes which could lead to a slowdown in the market.
It's very important to monitor any change in the policies that may affect the industry in the coming year. Understanding how the government influences the market can help you make better decisions about buying a home.
3. Demographic Trends
Let’s take an example, if a large number of young professionals move into a new city, they are more likely to look for a home in the surroundings. However, if they plan to leave that city, the market demand for housing in that particular city will slow down. This way observing the demographic trends around a person can help him in his purchase decision of buying a home.
In 2023, monitoring demographic trends in your local area and beyond will become important as understanding who is moving in and out of a neighborhood can provide insight into the potential direction of the property market.
4. Sustainability Quotient
Climate change is having a great impact on real estate investment. Real estate owners and investors are putting increasing pressure on the environmental, social, and governance (ESG) investing disclosure. In the post-pandemic times, homebuyers were more conscious of their carbon footprint and the environment and sought homes that reflect this attitude. Most homebuyers are willing to pay a premium for a green home.
Green homes that balance nature living will be a trendsetter in 2023. Along with health benefits, these homes improve quality of life, have lower operating costs of maintenance, and have a higher resale value. Given the many benefits that sustainable buildings offer, real estate investing in this sector will continue to rise in 2023 and beyond
5. Future Growth Potential
When evaluating future growth potential, a homebuyer considers the likelihood that the value of a property will increase over time. This can be influenced by factors like:
However, along with these factors we have other factors such as changes in the market conditions or local economy, which can have an impact on the property value.
According to a few developers, it is foreseen that the prices of properties will increase this year, but the factors we have read through above can still bring a significant rise in demand for good properties keeping aside the price range.
PropertyAngel is a leading O2O (online-to-offline) second landlord platform. We are a Bangalore-based property management company offering professional property management for individual apartments, houses, and villas. Contact us at (91-80-47095974) or (91-7406484455) if you need guidance on how to invest in the right property in Bangalore.