By Mr. Dhaval Barot, Managing Director, Bharat Realty Venture Pvt Ltd: 2024 is almost over, and the โreal estate marketโ is at a flux, influenced as it by economic forces, changing buyer preferences, and the continued influence of interest rates. Moving, into 2025, an understanding of what is currently happening and what will propel the housing market through 2025 needs to be known.
2024 Real Estate Recap: A Year of Adjustment
The past year has been one of โadjustmentโ in the housing market. The rise in mortgage rates has cooled demand a bit, especially from the โfirst time homebuyerโ crowd and all those individuals looking for more space. But thatโs not stopping the market.
Flats will always be in short supply, and yet there will always be the perfect home, just waiting for the right buyer with the right budget. This has led to a more segmented market as certain price ranges are seen to be stronger, yet luxury homes and entry-level are selling slower.
On the supply side, home inventory still remains a concern. Housing inventory remains low, causing upward pressure on prices even though price growth has softened compared to explosive gains the past few years. A lot of owners, mainly those with very favourable rates locked in years ago, are hesitant to sell, making homes for sale scarce.
Similar issues have been navigated in Indiaโs real estate market. High demand continues for the countryโs largest cities including Mumbai, Delhi-NCR, and Bengaluru in a rising interest rate environment.
Reports also show that residential sales had grown 15% during 2024, with over 2.2 lakh home sales in major cities, though unsold inventory remains a matter of concern. Over 5.5 lakh units lie unsold in key cities, with the premium housing sector having the highest level of unsold inventory.
Key Trends Shaping the 2025 Market
The Rise of Suburban and Rural Living
With the emergence of remote work and flexible office arrangements as permanent features in the professional landscape, it will be seen that suburbs and rural areas are here to stay and will remain major competition in the marketplace for homebuyers.
There has been an โenormous movementโ out of โcongested urban centresโ and toward less crowded areas where the cost of housing is significantly lower. This trend is likely to continue through 2025. Demand is bound to continue trending in the suburbs especially those near good schools and easy access to major cities.
Interest Rate and Affordability
The Federal Reserveโs actions over the past year have kept mortgage rates elevated, and while optimism exists that rates may start to stabilize in 2025, they are unlikely to fall back to the historically low levels of the last decade. Higher rates will continue to negatively affect affordability, especially for first-time buyers and those upgrading their homes.
Homebuyers will probably remain more cautious, weighing their long-term financial commitments more carefully. The Reserve Bank of India (RBI) has increased interest rates multiple times in 2024 in India. This pushed the home loan rates from about 7% at the beginning of the year to 8.5% by Q3 2024.
For most homebuyers, loans are now costlier, mainly in the higher-end categories. There is, however optimism that the RBI will relax rates in 2025, based on inflationary trends and the general economy. If that occurs, it may help to alleviate homebuyers who have been delaying purchases due to high loan rates.
Technological and Real Estate Innovation
In 2025, technology will define the real estate industry. Through artificial intelligence and machine learning integration, one will find a property through these new systems with virtual tours, with a predictive analytics mechanism helping sell or buy even with sellerโs and buyersโ intentions in the market.
Indeed, VR and ARs would be more highly represented on the property tour itself: view houses from outside or understand the property changes without even seeing it from the inside. Smart home technologies are likely to be a perfect sales pitch for many buyers, especially with a growing emphasis on energy efficiency and sustainability.
A house with features of advanced heating and cooling, energy-efficient appliances and smart security features will attract environmentally conscious buyers.
2025 Forecast โ For a balanced market
As we go ahead in 2025, the real estate market is likely to finally stabilize after years of roller-coaster volatility. Problems of affordability, inventory shortages, and particularly high mortgage rates seem endless, but a new balance in the market will be established as buyers and sellers alike adjust to the new economic reality.
The lasting trend toward suburbanisation, the growing role of technology, and the resilience of rental markets will shape a market that balances the needs of buyers, sellers, and investors.
It will come down to timing, geography, and the ability of those trying to buy or sell in 2025 to adjust to changing market situations.
A first-time buyer, investors, or homeowners who are looking to โupgradeโ, are all going to want to pay attention to where things stand in 2024 in terms of this particular real estate market so that they can make informed choices.
ย
ย
