Property represents a lifelong investment. When individuals decide to purchase a house, they consider the prevailing market price of that locality along with the existing rate trends. Currently, the situation is characterized by a significant drop in real estate sales; however, prices have not substantially decreased. Experts are forecasting a further downturn, which could ultimately be beneficial for the sector.
As prices increase, they eventually need to stabilize or decrease. This phenomenon was observed in equity markets, and it is now reflected in the real estate. After generating substantial returns over two or three years, the market is now experiencing a slowdown.
This slowdown can be attributed to the rapid price surge combined with historically low interest rates, which previously enhanced buyer demand. However, the situation has shifted; home prices have peaked, while interest rates have escalated. This shift has adversely impacted sentiment, resulting in buyers exercising caution. It's important to remember that property should be regarded as a long-term investment, with anticipated returns averaging between 25% to 35% IR.
One contributing factor preventing a collapse in the real estate sector is the average growth rate of the sector, which has consistently outpaced GDP growth. If the economy maintains a growth rate of 9%, the real estate sector is likely to grow by 15% to 20%. High interest rates, particularly for homeowners with floating loans, have posed significant challenges.