Forecasting Real Estate Trends in 2024: Impact of Inflation on Property Prices, Rental Rates, and Loan EMIs
May 23, 2024Investments

Forecasting Real Estate Trends in 2024: Impact of Inflation on Property Prices, Rental Rates, and Loan EMIs

by Godrej Properties Limited

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According to The Hindu, the residential real estate market in India is witnessing a surge in demand, and this demand is only going to rise, especially in luxury and mid-segment housing with significant value appreciation. The Indian real estate industry has always been one of the primary contributors to the Indian economy. As per the latest trends in real estate in 2024, the demand for housing across different segments is going to rise by  15-18 million sq. ft. by the year 2025. 

However, the real estate sector is a dynamic landscape with very low chances of accurate prediction. The impact of inflation on real estate remains imprecise. We can only analyse the current trends in the real estate market in India to estimate the future of the real estate industry in India in the coming years.

Current trends in real estate market in India

Here are some current real estate trends to forecast the upcoming real estate market trends: 

Affordable Housing Initiatives: The government of India has launched several initiatives to promote affordable housing, such as the Pradhan Mantri Awas Yojana (PMAY) and affordable housing funds. These initiatives are likely to support the growth of the affordable housing segment and increase homeownership rates in the long run. How is it going to impact the real estate in India? To support the housing projects, the government is improving infrastructure such as roads, transportation, water supply, and electricity that, in turn, enhances the livability of these regions and attracts both developers and homebuyers.

Increasing Demand for Rental Properties: Rental properties offer attractive investment opportunities for investors seeking steady rental income and long-term capital appreciation. With the potential for rental yields and property values to increase over time, rental real estate can provide a stable and reliable source of income for investors. Moreover, rapid urbanisation and migration to metro cities are increasing the demand for rental properties, particularly in cities with thriving job markets. As more people move to metro cities in search of employment opportunities, the demand for rental housing is expected to rise.

Impact of inflation on property prices

Although predicting the exact future impact of inflation on property prices is challenging, inflation may result in decreased demand for properties, hence lower property prices. Also, inflation may impact government policies related to taxation, regulation, housing finance, and urban planning and can have a significant impact on property prices. 

As mentioned earlier, the dynamic landscape can be challenging to predict. Therefore, investors and stakeholders should conduct thorough research and analysis to make informed decisions.


 

Frequently Asked Question

Q: What makes India's real estate sector an attractive investment option?

A: There are multiple reasons why Indian real estate is a profitable avenue for investors, such as the concept of green buildings, govt initiatives in the housing and real estate sector, prospects of rental income, etc. 

Q: Is the Indian real estate market expected to grow in the next few years?

A: With a GDP growth of 7-8% annually and a rapidly growing population, the Indian real estate market is expected to flourish exponentially in the upcoming years.

Q: Should you buy a house during inflation?

A: Whether buying a property during inflation is beneficial or not will depend upon multiple factors, such as economic stability, market conditions, etc.

Q: Is Inflation good for real estate?

A: Depending on various factors and market conditions, inflation can have both positive and negative effects on the real estate market.