A comprehensive analysis of how elections affect Indian real estate

Akash Pharande, managing director of Pharande Spaces, discusses past real estate trends during elections and predicts future trends. 

The political atmosphere in India, as in other countries, has a major effect on the property market, particularly during general election seasons. Election cycles have had a noticeable impact on the real estate market in the last twelve years. What can end users and investors expect following the upcoming general elections? Let us look at the Indian housing market’s behavior before and after the general election. 

Trends before the election

In the past, we have seen that the Indian real estate market slows in the run-up to general elections. Buyers and investors become cautious when there is uncertainty about election results and potential policy changes. Pre-election data usually show a trend of lower transaction volumes and a slower rate of property price increases. 

During the 2014 general elections, for example, sales and new product launches dropped significantly. Home sales in India’s top seven cities fell by nearly 30% in the quarters leading up to the elections. Similar patterns emerged in 2019, with both the primary and secondary markets showing as prospective buyers and investors chose to wait and see. 

Recovery for the following election 

The housing market usually recovers significantly following elections. Clarity in government policy and restored consumer confidence are frequently the driving forces behind this recovery. Following the 2014 elections, which led to the creation of a stable government, the market experienced a substantial rise. According to reports, positive consumer sentiment and increased investment led to a nearly 50% increase in sales in the following months. 

These patterns were repeated in the 2019 elections. Again, the guarantee of political stability aided the market’s recovery. Another factor to consider was that people now had confidence in the Real Estate (Regulation and Development) Act or RERA. By the end of 2019, new investments were flooding the market, not only in the residential space but also in commercial real estate. 

Current market and future outlook 

Despite the tensions surrounding the general elections, the Indian housing market has held up well this year. The current administration has taken several steps to boost housing demand, develop infrastructure, and implement economic reforms. The general belief that this government will remain in power has provided significant protection against the typical pre-election downturn. 

Following the election, the Indian housing sector is expected to remain optimistic. The market will undoubtedly rise if the ruling party can maintain policy and economic stability. There are also industry expectations that the GST on building supplies will be moderated with upcoming regulations. 

Aside from that, there is hope that financing for the housing sector will improve and that affordable housing will once again become a government priority. All of this will undoubtedly contribute to the housing market’s ongoing improvement. 

Investment implications

The post-election period will provide excellent opportunities for buyers and investors in residential real estate. When the government announces additional measures to boost the market and stabilize the economy, real estate will rise and yield significant returns as prices rise and demand rises. Such measures will be very compatible with the growing trend of digitization and transparency in real estate transactions.