Looking for your first home? Well, then the timing is in your favor as presently the affordability of Indian real estate is at its best.
A recent report states that the affordability of Indian residential real estate is at 15-year-best level. Owing to subdue increases in property prices and a rise in household income, this is the first time in 15 years that the affordability index is at its peak.
According to the global financial services major UBS, going forward, residential property sales are expected to gradually recover over the medium term. To add on to it are other factors like improvement in the current subdued job creation/income growth outlook could lead to even faster growth, which in turn is expected to give a new life of Indian real estate.
“We think India’s residential real estate sector is at the cusp of a gradual demand revival aided by affordability at 15-year-best levels, high expectations of property price increases over the next one to three years, reasonable comfort on personal finances and implementation of new regulations aimed at regaining buyer confidence,” Economic Times quoted the UBS report.
The report further added that the Indian real estate sector’s high inventory levels have also receded for the first time in many years. Owing to pre-committed demand amid limited supply, 5-7 percent rental growth for office assets in tech cities is expected over FY19-FY20, further added the report.
These changes seem to be attributed to the implementation of the Real Estate Regulation and Development Act (RERA), which has improved consumer confidence in buying property, especially in buying under-construction units. Not to forget the recent government’s push on affordability housing under Pradhan Mantri Awas Yojana (Housing for All 2022 Scheme).
The report also added that RERA implementation has been slower and awareness is much lower than the expectations. However, the results have now started showing in the form of favorable supply-side dynamics.