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Will the Upcoming Lok Sabha Elections Trigger a Real Estate Boom?

As India gears up for the upcoming Lok Sabha elections, a question lingers in the minds of many - will the housing market experience another peak in 2024? Historical trends suggest a positive outlook.

Experts point towards a potential boom, citing similar surges in housing sales and launches during the election years of 2014 and 2019. Anuj Puri, Chairman of ANAROCK Group, highlights the optimistic sentiment among homebuyers and the stability brought about by real estate reforms.

A report by ANAROCK Property Consultants echoes this sentiment. It emphasizes that key regulatory reforms are now in place, and positive economic forecasts from organizations like the IMF paint a bright picture for India's GDP growth. This, coupled with controlled inflation, is expected to fuel buyer confidence. The report further highlights developers actively acquiring land and venturing into new territories, reflecting their confidence in the market's potential.

Looking back at 2014 and 2019, the data confirms a significant rise in housing activity during election years. In 2014, sales in major cities reached new highs, with approximately 3.45 lakh units sold. Launches also saw a surge, reaching nearly 5.45 lakh units. While 2019 witnessed a slight dip compared to 2014, with sales of around 2.61 lakh units and launches reaching 2.37 lakh units, it still marked a recovery from the lull experienced between 2016 and 2019.

The report attributes the revival to major policy reforms like Demonetization, RERA, and GST, implemented in 2016 and 2017. These reforms are credited with transforming the once unregulated real estate market into a more organized and transparent sector. The report highlights the exit of unreliable developers and the emergence of stronger players, leading to a renewed sense of trust among homebuyers.

Anuj Puri further emphasizes that decisive election outcomes have historically encouraged homebuyers to take the plunge and invest in the market.

However, the report also acknowledges a crucial distinction between 2014 and 2019. While 2014 saw average property prices rise by a healthy 6% year-on-year, 2019 experienced a more modest increase of 1%. This difference can be attributed to the slowdown that impacted the real estate sector between 2016 and 2019, triggered by policy reforms and the NBFC crisis of 2018. The promising revival witnessed in 2019 was further challenged by the 2020 pandemic.

Despite these temporary setbacks, the report concludes with a positive outlook. The housing market has displayed significant recovery since 2021, and the momentum is expected to continue in the lead-up to the 2024 elections.

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