There are hundreds of factors that affect the real estate market in India such as cost of materials used in construction, loan rates, population, spending capacity, lifestyle changes, economic status, etc.

Let’s look at the major factors that affect the real estate market in detail:

The Cost of Materials used in Construction

The final cost of a property is highly dependent on the quality and cost of the materials used in the property’s construction. When the cost of the materials used in construction goes high, the overall construction cost goes high as well. This not only increases the final price of the property but it also slows down the pace and supply of construction. As the costs go high, demands may lessen among customers.

For example, if there is some small fluctuation in the cost of steel, the cost of construction goes high, and then, as a result, the final price also goes high. It is like a ripple effect. A small fluctuation somewhere creates bigger changes in the market.

FDI (Foreign Direct Investment) and GDP (Gross Domestic Product)

To give a boom to the economy of India, the Indian government now permits projects with 100% FDI. Currently, India has many projects with 100% FDI. These projects are mostly townships that house residential, commercial, retail, hospitals, hotels, entertainment, educational, etc. This change in government policy has affected the real estate sector in many positive ways. A strong GDP growth is anticipated in the foreseeable future. It will boost interest in real estate and accelerate urbanization across the nation.

Loan Interest Rates

Loan interest rates affect the real estate market in India. When loan rates fluctuate, they affect the builder and the property buyers, both. When interests are high, less properties are going to be constructed and less people will buy properties.

Availability & Affordability of Land

There is a limited supply of land. And because of its limited supply, the price of land is gradually rising year by year. It is quite challenging for builders to acquire land at higher costs and then sell homes at competitive prices. And contrary to this, there is a huge demand for affordable houses in all areas.

Increased Spending Capacity

Only when a family’s income is stable enough do they consider going from living in a rented home to owning a house. Since India has shifted from socialism to a capitalist economy, we have undergone massive changes. One of those changes being our increased capacity to spend on our needs and wants. Capitalism has brought more jobs for people. More jobs ensured more salaries. And more salaries increased the affordability of people. This spending capacity of people has been going up continuously.

Rising Number of Population & a Trend of Nuclear Families

Another significant factor that has affected people is the population. As we all know that India’s population has constantly been on a rise. Adding to that, is a new trend of nuclear families. Compared to the living trends two decades ago, people now prefer to live with their spouse and children more rather than with their joint families.

Concluding, there are many more factors of the Indian economy that affect the real estate market in India.