There has never been a real decline in the popularity of second homes in India. It certainly is a full-fledged real estate market segment in its own right. However, just as on the first home market, the demand for second homes is driven by the general economic climate. When the economy declines, all real estate segments decline with it. By the same coin, the demand for second homes always rises when people’s spending power increases.
Stock market correction is generally perceived to be the time for fresh entry or buying more stocks. Right? It is not only seasonerd investors but even the immatures ones also try best to time the market. Timing the market is basically making an assessment as to when the market is at its lowest point and is poised for a turnaround. It is a different matter that market has always rewarded those who spend long time in the market rather than trying to time the market.
With a predominant demography that grew up without money, the very subject of money is interlinked to the deep-rooted anxiety and insecurity of Indians. This is why a vast majority of us more often than fail to differentiate between saving & investing. For us, saving money is eqaul to investments, and safety & cushion of money is at the top of the mind. The fact of the matter is that saving gives the returns at a base rate that is lower than the inflation rate. This erodes the purchase power of money. A bank Fixed Deposit (FD) of INR 1 lakh might look fancy at INR1.7 lakh next year, but the appreciated amount can not purchase today what you could have purchased with that amount last year.
Affordable housing is witness to degrowth at a time when luxury housing is on a roll. A perception has hence gained ground that the higher interest rates in the range of 8.5-9% is what is the bottleneck for the buyers. However, the fence sitting buyers across the country, more so in the affordable segment, don’t think so. They rather cite the empirical evidence when the housing market was on a roll even when the interest rates were in double digit.
Call it influence peddling of the real estate stakeholders, or a thought-process that is culturally ingrained in the minds of the Indians, but the collective consciousness is made to believe that real estate investments are insulated against losses. Track2Realty questions the rationale. Real estate as an asset class has been oversold with the promise that you can never suffer losses with a physical asset, unlike stocks and mutual funds where an investor can suffer huge losses. To top it all, there is a general belief that real estate offers the best Return on Investment (ROI).
Some of the English dailies had come up with marvellous marketing idea, as they called it then, of barter deals which they thought was a win-win for both the media houses as well as the builders. They got into a barter deal where builder got crores of advertising space with the publication without a single rupee exchanging hands. In such deals, the media houses instead of advertising revenue got that much exchange value of property in the upcoming projects of these builders. Property supplements were launched by the mainline newspapers that violated all ethics of journalism to glorify the builders and their projects. Such was the clout of these builders that they even interfered in the editorial policies of these newspapers. They felt empowered & free to label the news copy and the journalists as negative, if they didn’t like a news item.
Whether one should have real estate in the portfolio of investments or not is an age-old debate. World over, it is as much a topic of discussion within the built environment of real estate as with personal finance. Arguments on both sides of the divide have their own merit, but the fact remains that there is no one size fits all answer. The personal finance pros believe that stock market & mutual funds reward are far greater in the range of 14-18% per annum. The real estate proponents, on the other hand, assert that real estate rewards are no less over a longer period of time, and it also saves the investors from the cyclic high market volatility. A Track2Realty report.
The recent correction of Indian stock market has reignited the age-old debate of real estate versus stock market. In the last few weeks I am asked at various forum, it’s rather bombardment of arguments, why I don’t accept the reality of property market being a safer bet with lesser volatility. A little bit of correction in stock market makes every stakeholders & influencers of property cite it as to how property is the safest asset class. All that I can say is that I am amused with the logic, or rather lack of it.
Can Union Budget 2025 fix the larger problems afflicting the business of Indian real estate? This question is more relevant than asking to what extent the Union Finance Minister will fulfill the wishes of the sector. This is because the real estate has largely been ignored, heavily taxed, and least considered in the budget of last few years. Irony is that for some strange reasons the stakeholders who have a large wish list on the eve of Union Budget every year, justify the sector being ignored in the post budget analysis.
After influence peddling with a false narrative of ‘All is Well’ for so long the built environment of Indian real estate has finally conceded to the reality of headwinds. At the beginning of the yeart 2025 a section of stakeholders are accepting for the first time that declining home sales and high prices are going to hurt in the year ahead. However, they are yet to come to terms with their own faultlines. Track2Realty questions whether talking about the need to lower home loan interest rates and some concessions with the upcoming Union Budget is going to make any tangible difference.