The role of market conditions in real estate investment


By: Arvind Jain, Managing Director – Pride Group

Arvind Jain, Pride Group, Pune real estate market, India real estate news, Indian realty news, India property market, Track2Realty, Track2Media ResearchTrack2Realty: Home buying is one of the most significant financial investments, and it is natural that one would be concerned about the worth of this investment. Consequently, one should take one’s time to do proper research when one is purchasing a property.

Hurried decisions on this front invariably result in paying more than one should, and this has an impact on how the property performs as an investment asset. A significant clue to the worth of a property would be the location. Next are the market conditions prevailing in the location where one is planning to invest.

Further, one will have to estimate whether the property value will increase in that specific location, and if so, then by how much. Locations that are considered popular now might not remain so in the near future, and vice versa.

For home buyers, the best time to invest in a property is when it is a buyer’s market. A buyer’s market is defined as an environment where there are more homes ready to be sold than the actual number of customers.

Competition among sellers brings down the prices to favorable ranges, and sellers would also be more open to negotiations, concessions and waiving some of the additional charges related to residential property purchase, such as stamp duty and registration charges. A higher number of available properties will also give buyers the added advantage of a wider range of choice.

A seller’s market, on the other hand, is one where a significant numbers of buyers would be looking at a lesser number of properties. This gives the seller an upper hand, and buyers are sometimes open for a bidding war for the home of their choice. Obviously, property sellers earn the maximum profit in such a case.

Market conditions are determined by a variety of factors like the general state of the economy, shares/profits and losses of major players/employers/companies in an area, changes in community fabric (such as infrastructure changes), construction of new homes, and natural calamities. Market conditions are also influenced by policy-level changes, such as revisions in interest rates and incentives given to developers, property buyers or both. 

Experienced and savvy real estate investors know their way around market conditions and will be able to identify if it is the best time to make property purchases. If a wait of a few months can save you a good amount of money, why hurry?

However, normal home buyers cannot think and operate like investors. For them, the primary concern is whether they are obtaining the best value for their capital expenditure, or whether waiting for a few months could result in significant savings.

They are often puzzled by the multiple inputs about the existing market conditions that they get from media stories.  It is hard for them to make an independent decision, and the various viewpoints provided by friends, relatives and colleagues – many of whom consider themselves ‘experts’ – do not help.

One of the most reliable ways for a normal middle-class home buyer to ascertain whether market conditions are optimal for property purchase is to study the findings of reputed, independent research agencies. Additional inputs can be sought from reputed brokers, but finally there is no really ‘fool-proof’ strategy.

Apart from being a financial decision, home purchase is also a decision based on one’s own perceptions and desires. Often, the best way to reach a decision on buying a home is not guided so much by market conditions but one’s own readiness to go in for home ownership. Decisions reached on this basis are usually the most satisfying and fruitful.


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