Real estate is a market where people invest a large chunk of their savings into buying premium apartments either for a living or for renting. Buyers often face rapidly increasing property prices, bidding wars and long search periods in a competitive market before they finally find the house they are searching for. This is especially true for economically developed cities like Bangalore. The bitter truth is that, regardless of having many connections, the sector is out of an individual’s control. Here are some pointers that do have a hold over it and influence the trends.
Every drop makes an ocean
Every single, minute person makes up the population or, demographics of a certain city. Variables such as age, race, gender, income, migration trends and population growth are viewed to be insignificant factors, but they actually play a big role in manipulating the real estate market. Taking into consideration these factors will help one perceive whether a neighborhood is a home to a younger or older generation for example. And if they want to sell this home, what type of people should they target as buyers. These things help one to anticipate what to expect out of their residential apartments when things go down South. The baby boomers are another demographic changes that influence the property market for many decades, and its impact is still being seen today as they go into hibernation. They are looking for residential apartments that will serve as retirement nests.
Let’s get to the bank- a mammoth influencer
The bank is a giant that wields the strength to control many aspects of the economy, including real estate. The bank has the power to decide the interest rates. This will, in turn, impact a person’s ability to purchase the property. The lower the interest rate, the lower the cost to obtain a mortgage on a particular home. It creates a higher demand for property and this once again pushes the prices up. Currently, when it comes to affordability, the premium apartments are in demand in urban areas.
Location as the key to the treasure chest
It is a noticeable fact that the buying trend of people in Bangalore usually tilts more to the side of favorable locations instead of auspicious property. Individuals would prefer living in a posh locality with much smaller homes than having luxurious homes in backward places. This is exactly what the builders and developers aim for.
They try to build homes in localities where:
- There is the presence of good schools.
- Shopping malls, recreational centers, and public transport amenities.
- Builders also try to create projects in proximity to the employment hubs in that area.
These factors are not dependent on each other, but this trinity does ensure that a particular home is highly sought after. Usually, buyers also settle for 2 out of 3 amenities, and if all three are wanted, they have to shell out an exorbitant price for their dream home and compete with many other potential buyers.
Economical and political factors also affect buying process
Economic factors like GDP, employment, the prices of goods and services, also have leverage on property prices. When the economy is down, it is obvious that real estate will also go down. But realistically speaking, ventures like hotels are likely to be more impacted by an economic meltdown than compared to villas in Bangalore and office spaces. If the economy goes down, individuals can avoid going to hotels and splurging money. But office spaces and homes are considered as a necessity. Their prices and appraisal values would indeed decrease, but not to a very great extent.
To control the drastic effects of the economy in today’s volatile market, the government sometimes introduces certain grants, policies and tax subsidies to encourage people to buy property to help get the economy back on track. This does indeed increase the demand for real estate but only temporarily. The Indian government’s policies over the past two and a half years has been mainly aimed at improving the realty sector and infusing transparency into the entire process with demonetization marking the first step towards this process. The moves related to the Real Estate Regulatory Act, Real Estate Investment Trusts, smart cities, Goods, and Services Tax will also boost demand for properties.
The stamp of approval
An introspection report is dire in determining the price of a particular property. When the property is really sought after, some buyers may forego an introspection report so that the seller would prefer to hand over the property to them compared to other buyers who would have it scrutinized. But the mortgage value on any property highly depends on the introspection report because the bank will not shell out money for a termite farm. The report will disclose what repairs the seller has to make to the house before it is optimally ready for living. The higher the recommended repairs, the more the negotiation the buyer can make. If one deal does not work out, the seller has to reveal the report to the future buyers also, further reducing the chances to sell the property at the original listing price.