After the pandemic was over, it left its mark on every hemisphere of our lives. The countries’ GDP, trade relations, and consumers’ purchasing habits on a bigger level were impacted very badly. Layoffs and businesses trying to reduce costs led to a scarcity of money in common people’s pockets.
The impact of lockdowns can be seen still and the recession is an ongoing discussion topic everywhere. Few countries in the West have started experiencing it and it has started affecting the global market resulting in price hikes and other issues. In Real estate sectors across the world also, we saw a major shift. The prices of the raw materials increased. Similarly, construction cost got increased.
As a result, property prices saw a hike too. It led to buyers’ reluctance to invest in real estate. And when supply exceeds demand, you can expect what will happen. Many properties remained unsold, and a wave of uncertainty hovered worldwide around the real estate sector. But Real Estate In India has been able to keep its momentum and infect, and real estate investment in India has become one of the safest investments with very lucrative returns.
Anyways, real estate in India bounced back in its own way. Despite the problems going around the global property market, real estate investment in India continues to flourish. Tremendous growth is here, overcoming all shortcomings.
According to a Proptiger report, massive growth in both launch and sales numbers is being seen. The market of residential real estate in India saw a 68% increase over the July-September period of 2020. Also, the property market in India saw a 173% Quarter-on-Quarter (Q0Q) growth in the new supply of launched properties.
But, the question that might occur in your mind is - will this growth continue? After all, the recession strongly has impacted the developed countries' economies. Will buyers in India still be interested in investing in real estate investment in India?
In this blog, we will talk about it in detail. First, we will shed light on the effects of the recession in the global market and in India. Further, we will discuss the recession’s impact on the real estate market in India. You will learn what experts say about these matters. Finally, you will get answers to some commonly asked questions regarding the recession and its impact on real estate in India.
The scenario is called a recession when a country’s GDP falls for more than two quarters consecutively. Before it occurs, some quarters of slowdown take place. An economy normally expands for 6-10 years and enters a recession afterwards. The duration of the recession can be anything between 6 months to 2 years.
After the pandemic, followed by the war in Ukraine and other crises, a wave of recession landed up and disturbed the whole world’s economy. Economic growth across the world is slow, while inflation is high. As per Economist’s prediction, much of the world is now in recession in 2023.
Amidst this gloomy scenario, the growth of India is always a matter of discussion. Economists, property consultants, and other eminent personalities worldwide are always curious to know how India is still growing when bigger economic powers are facing the heat of recession.
US and European countries are interconnected with India’s economy in many aspects. So, it is a concern indeed- will the recession affect India? In this context, we can mention what Nouriel Roubini, the renowned Stern School of Business professor, said-
According to him, India is expected to see a 7% growth rate or even higher if the right policies are introduced. Also, its economy can expand more than China’s in the upcoming decades. As he mentioned, the possible reasons behind this statement are:
I think that the Indian model is better than the Chinese, where the government controls all the data, or the US, where a bunch of oligopolistic big tech firms control the data,"
Now, let’s talk about how India’s real estate market will perform during this recession period.
Indian real estate market is quite different than that of the US. Here, people buy homes as a lifetime investment, a place to live in. On the other hand, in the USA, it is more about investments than a home to live in.
So, this real estate in India and the impact of the global recession on it are interesting topics for debates and discussions. Experts have already discussed a lot on this topic. Anyways, experts opined that both USA and Europe markets would see weak to very weak growth. Those same experts said that India would face moderate to strong growth.
The reason behind the successful growth story of real estate in India is clear. It is the demand. Buyers’ demand for quality homes is still there. And the supply is not enough yet. As per a Knight Frank study, in 2022, the number of units sold across the top eight Indian metro cities was 3,12,666. It is a 34% YoY increase, despite hikes in property prices and home loan rates.
Also, the government’s mega infrastructure projects at all levels play a great role in preventing a high impact of the recession on real estate in India. They include expressway development, Brahmatala projects, rail, airline projects and Pradhan Mantri Awas Yojana etc.
So, it is evident that people are still interested in investing in real estate in India despite the odds faced in 2020 and 2021. The housing demand will take time to be fulfilled. So, the impact of the recession will be minimal on real estate in India.
Focusing on what the experts say, we can conclude that the real estate market in India will lead the growth story of India and will help establish India as a global leader. The new government policies and economic development can empower homebuyers well. Eventually, 2023 is on its way to becoming an ideal year for real estate in India.
Anyways, it is difficult as a commoner to understand every ins and outs. We will try to address a few general queries below-
Now, let’s end today’s discussion with some commonly asked questions. The questions are as follows:
There are problems like price hikes resulting from the recession. But, as real estate consulting services suggest, real estate in India will continue to grow.
The government has taken the initiative to push tier-2 cities’ economic growth. Also, local activities are resuming after the pandemic. Businesses are reopening, people are planning real estate investments in India. So, real estate prices will probably be under your budget in 2023 in India.
Buying properties in 2023 is definitely a good decision. After all, new home loan policies and other government initiatives are making home prices affordable. However, before buying a home, you must discuss with a reliable real estate investment company for in-depth knowledge.
Yes, property prices can increase this year, considering the growing housing demands. People in India want to settle down in their own homes, as the pandemic taught us the value of staying at home. Anyways, before a massive price hike comes in real estate in India, you should invest at the earliest!
According to the report by IBEF, India's real estate sector is expected to touch a US$ 1 trillion market size by 2030, accounting for 18-20% of India's GDP.
The experts remark that India’s real estate market will grow at a standard rate. It will be stable and robust. The financial year 2023-2024 will be a buyers’ year with lower home loan rates and other facilities. The market may see a growth rate (CAGR) of 9.2% during 2023-2028.
Still, do you have any doubts or queries or do you want to have a deeper understanding before investing in real estate in India? Please visit a reliable real estate consulting company for more details about the recession and its impact on Indian real estate.
Title - How Will the Recession Affect Real Estate in India?
Meta description - Is it the right time to invest in real estate in India or not? Read this blog to make an informed decision before investing.