Low Demand, High Prices: Should you postpone real estate investment for now? – Money News
Fluctuations are a law of nature, affecting everything from everyday lives to larger industries like real estate. This principle has been particularly evident in the real estate sector during 2024. After the COVID-19 pandemic, as conditions began to normalize in 2022, both investors and end-users started actively buying properties. This enthusiasm extended into 2023 as well, with real estate becoming a favored sector for investment and personal use. However, the high demand led to a steep rise in property prices, with metropolitan cities witnessing an average price hike of 30% this year.
This unexpected surge, particularly in new projects, has now resulted in a decline in demand. A recent report corroborates this trend, showing a 6% drop in property demand in NCR and up to 20% in Kolkata. Similar trends are visible in other cities and metro areas. With such conditions, the pressing question is whether this is the right time to invest in real estate or should investors and end-users wait a bit longer? Let’s analyze the situation.
Should You Wait or Invest?
The golden rule of any investment is to buy low and sell high—whether in stocks or real estate. Currently, property prices are high, which is directly affecting demand. Economic principles state that when demand decreases, prices eventually follow suit. With property demand already down by around 6%, waiting a little longer might yield better opportunities.
Also Read: Lessons from LA Fires: Get the Right Fire Insurance for Your House
“Traditionally, property demand peaks between Navratri and January, prompting developers to hike prices. Conversely, demand often dips during February and March due to income tax commitments and limited liquidity, making it a favorable time for buyers. Given this pattern, the coming months could see further dips in demand, creating opportunities for more reasonable prices. If you’re considering investing in the NCR or other major cities, it might be wise to hold off for now,” suggests Pradeep Mishra, CMD, ORAM Developments.
Resale Properties: A Smart Alternative
If postponing your investment isn’t an option, or if you’re looking to buy a property for personal use, resale properties could be a better choice. Look for options in newly-developed areas or well-established neighborhoods. This approach has two benefits: access to good infrastructure and a wider range of reasonably priced properties.
To explore resale properties, you can use property-listing websites or seek help from local brokers. However, ensure the broker has a good reputation, and always verify property documents carefully to secure your investment.
Consult Realty Experts & Brokers for Insights
Most developers rely on brokers to sell their projects. These brokers assist not just in buying properties but also in reselling them. If you’re interested in investing in a recently-launched project in a new area, a broker can help you identify opportunities.
For example, “if a property was launched six to eight months ago at ₹6,000–7,000 per square foot and now sells at ₹10,000, a broker might help you find a seller willing to sell below the current market price, say at ₹8,500–9,000 per square foot,” says Mishra.
Such deals allow you to purchase good properties at a discount. However, finding such opportunities requires partnering with a trustworthy and competent broker. Seek recommendations from friends or well-wishers to identify the right professional.
Final Thoughts
Real estate investment is a long-term commitment, so avoid rushing into decisions. If you want immediate investment opportunities, consider exploring second- and third-tier cities. Many of these locations now offer modern, well-equipped projects, making them promising alternatives for real estate investment.
By exercising patience and conducting thorough research, you can ensure that your investment is both strategic and rewarding in the long run.