The relationship between general elections and the residential real estate market seems to be more than just a coincidence, at least if we consider the trends from the last two election years. In both 2014 and 2019, which were election years, the housing market witnessed significant peaks. In 2014, approximately 3.45 lakh units were sold in the top 7 cities, while a staggering 5.45 lakh new units were launched. Similarly, in 2019, there was a surge in housing sales, with around 2.61 lakh units sold, and approximately 2.37 lakh new units were launched after a slowdown in the sector post-2015 due to structural changes like Demonetization (DeMo), Real Estate Regulation Act (RERA), and Goods and Services Tax (GST) implementation.
The decisive election results in both these years played a crucial role in boosting homebuyer sentiment. The years following these elections saw a transformation in the real estate sector, with the exit of unreliable developers and the emergence of more organized players, instilling confidence among homebuyers.
Anuj Puri, Chairman of the ANAROCK Group, commented on this trend, stating, “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.”
However, when comparing the price trends during these election years, 2014 appears to have outperformed 2019. Average prices in the top 7 cities rose by over 6% annually in 2014, whereas in 2019, prices rose by merely 1% annually.
The residential real estate sector in India witnessed a significant slowdown between 2016 and 2019 due to various factors, including policy reforms and the NBFC crisis post the IL&FS issue in 2018. However, from 2019 onwards, there were signs of revival, which were momentarily dampened by the COVID-19 pandemic in early 2020.
Looking ahead to 2024, the current election year, the signs are positive for the housing market. With most real estate regulatory reforms already in place, strong GDP growth predictions by international organizations like the IMF, controlled inflation, and high homebuyer optimism, 2024 could well witness another peak in housing sales and new launches.
“As things stand now, all signs currently favour the residential market in 2024, and the year can well create another peak in housing sales and new launches,” says Anuj Puri. “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.”
Factors such as clean balance sheets of developers, closure of substantial land deals, and the entry of large developers with good track records into newer territories further support the expectation of a peak in the housing market in 2024.
