Potential homebuyers already know that buying a house in India costs an arm and a leg! Over the past few years, the real estate market in the country has unfolded in the most staggering ways witnessing a steady high in property prices.
Research indicates that there has been a remarkable increase in housing prices in India during the first three months of 2023. On average, the year-on-year growth across all significant realty markets has been approximately 7%. The average price per square foot has also recorded a significant high in top-tier cities like Kolkata.
Undoubtedly, the heat is overwhelming for prospective homebuyers, especially those from middle-income groups.
But what exactly leads to the unprecedented shift in property prices?
Read on to know!
Top 6 Factors Leading to the Steep Property Prices in India: Explained
The following factors act as a driving force behind the price of residential properties in the country.
- Demand and Supply Trends
The demand and supply of properties significantly impact property prices. When there is a high demand for properties, but there are not enough properties available for sale (which means high demand and low supply), buyers are ready to bid more to obtain the property, leading to higher real estate prices.
Currently, India is experiencing a spike in population. However, there aren’t enough properties to accommodate the needs of a large pool of home-buyers, hence the spike.
- The Rise in Purchasing Power of People
The primary determinant of a buyer’s decision to purchase property is their income. Recent years have observed a substantial surge in consumer purchasing power in India. This can be also attributed to the massive influx of foreign companies that have created innumerable employment opportunities with substantially high remuneration.
The resultant high affordability has propelled a high demand for both residential and commercial real estate.
- Development of Infrastructure
Macroeconomic factors like infrastructural development, and the availability of schools and hospitals around, have also resulted in soaring property prices. This, yet again boils down to a high demand.
So, the better the infrastructure in a given location (e.g. Newtown, Kolkata), the more people want to buy it. Transportation upgrades like metro projects also result in substantial economic growth for neighbourhoods.
- Interest Rates on Home Loans
Today, several reputed banks and financial institutions offer attractive interest rates on home loans and land loans. This significantly stimulates the buyers’ interest in purchasing property, which in turn escalates demand in the real estate market, thus causing a surge in Property prices.
The upsurging costs of raw materials, labour, and transportation following inflation are also responsible for the skyrocketing property values in India.
- Multiplying Job Opportunities
The real estate values tend to skyrocket in areas with thriving commercial spaces. For example, the prospering IT sector in Newtown with a multitude of renowned IT companies has led to an increase in the values of both residential and commercial property in the region.
The sharp surge in housing prices in India is, therefore, an interplay of multiple factors. While this has created lucrative opportunities for developers and investors, it has also led to affordability issues for home buyers.
However, reliable developers like Swapnabhumi Newtown have come up with opulent yet affordable housing options with the township project. It is spread across a vast area of more than 500 acres and provides investors with a range of land configurations to choose from. Being developed with the modern home buyer in mind, it offers wide-ranging amenities to promote a comfortable lifestyle.
You can also avail of the affordable no-cost EMI plans to take some load off your chest. Contact us now!