According to you, what impact can inflation have on the realty sector?
According to a survey conducted by www.makaan.com , the end users of the real estate industry are of the view that inflation consistently affects the price of real estate across the country. 83% of the people say that they have experienced a direct impact of inflation on the realty sector; 13% are of the view that inflation has an indirect impact on the real estate sector and only 4% say that it does not have any impact.
Generally speaking, inflation means the increasing cost of purchasing a tangible or intangible service or a product. It affects the buying of groceries, the expenditure incurred on travel, vehicles, and especially the housing market in a negative way. In relation to the real estate market, companies/ developers that build homes or sell construction materials, etc. also push their costs onto the consumer; thus increasing the property prices for those looking to buy. This in turn gives rise to what the experts name as the “seller’s market”.
If seen from a different perspective, then buying a house could be an excellent move during inflation. Inflation affects lives and creates a demand for money. In this scenario, people are forced to sell their homes for less than what it could have been sold earlier. However, there are not as many buyers in the market who can afford to buy a reduced-price house during an inflationary period; thus, the housing market slows down quite a bit.
Naturally, the appreciation of property value over time does include inflation factors. It is important to understand that trends in the market will go up and down but the real estate market continues to climb.