Realty recovery underway?

With interest rates still stationed at comfortably low and affordable levels, the recipe is right for some improvement in the home market, says Sonal Sachdev

W e’ve been talking about the sluggishness in the market for some time now, but are some recent indicators a pointer to a recovery? Let’s take note of a few recent developments and data releases.

First, RBI’s quarterly Housing Price Index (HPI) indicates a price increase of 8.3% across major cities in the December-ended quarter; the Nikkei PMI shows industrial output has recorded a 5-month high; developers are extremely bullish on commercial developments in cities like Bengaluru and Hyderabad, and are acquiring large tracts of land to develop office spaces (in fact, a few developers like Puravankara are looking to increase their share of commercial assets portfolio as a business plan); the hurdles to GST have finally been cleared and a roll-out is slated from July 1; BJP has wrested Uttar Pradesh with a significant majority; high anxiety over the Trump administration’s policies impacting outsourcing is getting tempered.

All these factors seem to be providing a backdrop for improved market sentiments and this appears to be manifesting itself in some perk-up in the realty sector. Paucity of good commercial space in cities like Bengaluru is clearly visible, given the intent of several global technology companies and research arms of other multinationals to scale up operations. Larger operations spell more jobs, which translates into greater housing demand.

With Prime Minister Narendra Modi’s pet initiative Make in India also finding more takers, greater opportunities for employment in manufacturing may also not be far away. Such factors are likely to propel economic recovery and a quicker pick-up in the realty sector. With interest rates still stationed at comfortably low and affordable levels, the recipe is right for some improvement in the home market.

An interesting observation from the RBI index findings is the notable performance of UP cities, Lucknow and Kanpur. Was this in anticipation of a change of guard and faster development? If development is the the plank for upcoming elections in States like Karanataka and for the next general elections, get ready for a flurry of activity. Any accelerated Government spending can only be good news for the economy and the realty market. So, if you were waiting for some signals to initiate your home buying exercise, a few are springing up. Stay alert and keep an eye on the basics: credentials of seller, regulatory clearances, clear titles, marked-to-market rates and the best financing deals. This time is better than possibly just any to go house hunting. Start scouting!

Former Editor, Outlook Business and Executive Editor, NDTV Profit, the writer is a personal finance expert. Mail him at propertyplus@ thehindu.co.in