Lok Sabha Elections 2024: Will History Repeat, Housing Sales Set For Another Peak?

India's residential real estate market, which has historically demonstrated a remarkable link with election cycles, comes under scrutiny once again as the country prepares for another round of general elections. Industry insiders are nervously awaiting the possibility of another housing boom in 2024, with data from the two election years prior indicating notable peaks in home activity.

In both 2014 and 2019, election years witnessed remarkable upswings in housing sales, accompanied by substantial numbers of new launches across the top 7 cities. In 2014, a staggering approximately 3.45 lakh units were sold, coupled with a remarkable 5.45 lakh new units hitting the market. Similarly, in 2019, housing sales surged to around 2.61 lakh units, while new launches reached approximately 2.37 lakh units. These peaks came on the heels of significant policy reforms, including demonetization (DeMo), the Real Estate (Regulation and Development) Act (RERA), and the implementation of the Goods and Services Tax (GST).

"A major factor driving the housing market's phenomenal performance in 2014 and 2019 would have been the decisive election results. For homebuyers, it was an end to fence-sitting and a confident move to 'buy' positions." Anuj Puri, Chairman of ANAROCK Group, sheds light on the role of decisive election outcomes in shaping consumer sentiment.

An analysis of price trends during these election years underscores the varying degrees of market performance. In 2014, average prices in the top 7 cities surged by over 6% annually, signalling robust growth. In contrast, 2019 witnessed a more modest increase of only 1% annually, indicative of subdued market dynamics.

"Housing demand continues to be upbeat across cities after the announcement of the election dates, with homebuyers remaining highly optimistic about the real estate market" added Anuj Puri.

The period between 2016 and 2019 witnessed a significant slowdown in India's residential real estate sector, attributed to policy reforms and the NBFC crisis. However, from 2019 onwards, the market began showing signs of recovery, despite temporary setbacks caused by the COVID-19 pandemic.

Looking ahead to 2024, industry experts are optimistic about the sector's prospects, citing several key factors:

1. Regulatory Stability: Most real estate regulatory reforms and norms are now firmly in place, providing stability and confidence to investors and homebuyers alike.

2. Economic Growth: International organisations like the International Monetary Fund (IMF) have issued optimistic GDP growth predictions for India, which bode well for the real estate market. The country's rapid economic expansion indirectly fuels demand for residential properties.

3. Controlled Inflation: With inflation currently under control, there is a sense of financial optimism among homebuyers, who feel more confident about making long-term investments in real estate.

4. Developer Preparedness: Developers have significantly strengthened their balance sheets, closing substantial land deals and expanding their presence in promising markets. This, coupled with the emergence of reputed developers with solid track records, instills further confidence in the market.

The residential real estate market is expected to reach still another peak in 2024, as India works through the difficulties of organising yet another general election. There are attractive chances for both purchasers and investors in the housing market, thanks to regulatory stability, positive economic forecasts, controlled inflation, and strong developer activity.