Why the property prices in India have increased rapidly in recent times ?

In recent times the property prices in India have rapidly increased and this  phenomenal rise is all over India. In the first half of the year 2023 i.e. from January to June ’23 the sale figure of no. of units is highest in the last 10 years. 

As per the recent report on property prices released by CREDAI, Delhi-NCR housing prices have risen by 14 per cent year on year basis in the second quarter of 2023-24. Hyderabad has a rise of 13 per cent in housing prices and Kolkata remained on top with 15% rise during this period. 

To know the reasons for recent rise in the price we should look back the situation of few years back. During 2014-15 three developments took place which affected the property market. These are demonetisation, RERA and GST. 

All these three factors affected the market in their own way and resultantly demands of the property reduced substantially. Therefore inventory of the properties became very huge. Developers were also not able to adjust with these factors and hence very few new projects were launched during 2015-17.

From the year 2018 new launches started. However the period 2020-22 were badly affected with Covid. There was very less demand of property as the entire world was struggling to survive from Covid only. 

 However during 2022-23 there was high demand of high value properties and this has continued till date. Reason behind this was that the investors where away from the market since 2014 which was a long time and the entered into the market with a good accumulation of fund. This pushed up the demand of the properties. Considering such a high demand developers  started launching new and spacious projects rapidly.

 As per the latest report published in ET sales of luxury residential properties jumped more than two times to 84,400 units across seven major cities during January-September this year from 39,300 units in the corresponding period of the last year.

During this period NRI investment also started increasing. Around 15 to 20% of the total investment in real estate are being done by NRIs. 

There is Rapid growth of urban population as well. Where as the land in cities are very limited. Middle class population and their income has also increased. Now a days demand for integrated lifestyle has increased. Therefore the new projects launched are full of amenities and luxuries.

However for such a boom period duration is generally 5 to 7 years, out of which already 2.5 years have past. Therefore the investors should be careful while investing their fund for a very long time with intention to earn a high return.

Though if someone wants to buy a property for his own living then he should not be worried much about increasing or decreasing prices of the property. At the most he can decide the locality and timing to buy the property as per his financial strength. otherwise just for investment of surplus find to get higher return there are various other good investment avenues. A comparative study between investment in Stock Vs. Real estate can be read in the blog on manowise.com .