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6 Factors That Influence Real Estate Prices

Blox Social
Posted on
Apr 16, 2023

Real estate is one of the most sought-after investments in India, as it offers both capital appreciation and rental income. However, not all properties are equally profitable, and there are many factors that influence the price and demand of real estate in different locations. These include everything from location to market trends to technology.

Let us explore some of the key factors that affect real estate prices and how you can use them to make informed decisions when buying or selling property.

1. Location:

Location is the most obvious and important factor that determines the value of real estate. Properties located in prime areas with good connectivity, infrastructure, amenities, and social infrastructure tend to command higher prices than those in remote or underdeveloped areas. 

Location also affects the supply and demand of real estate, as some areas may have more potential buyers or sellers than others. For example, properties in metro cities like Mumbai, Delhi, Bangalore, and Hyderabad are usually in high demand due to the large population and economic activity, while properties in tier-2 or tier-3 cities may have lower demand and price.

2. Size:

Size is another factor that influences real estate prices in India. Generally, larger properties have higher prices per square foot than smaller properties, as they offer more space and comfort. However, size also depends on the type and configuration of the property, such as whether it is a flat, villa, plot, or commercial space. 

For example, a 2 BHK flat may have a lower price per square foot than a 1 BHK flat in the same area, as the former has more rooms and utility space. Similarly, a villa may have a higher price per square foot than a plot in the same area, as the former has more built-up area and amenities.

3. Quality:

Quality refers to construction quality, design, architecture, fittings, fixtures, and property maintenance. Properties that are built with high-quality materials and standards, have attractive and functional design and are well-maintained tend to have higher prices than those that are poorly built or maintained. 

Quality also affects the durability and longevity of the property, as well as its resale value. For example, a property that is built with RCC structure, has branded fittings and fixtures, and has regular maintenance may have a higher resale value than a property that is built with inferior materials or has structural defects.

4. Amenities:

Amenities refer to the facilities and services that are available within or near the property, such as parking space, security, power backup, water supply, lift, gymnasium, swimming pool, clubhouse, garden, playground, etc. Properties that have more amenities tend to have higher prices than those that have fewer or no amenities. 

Amenities also affect the lifestyle and convenience of the residents or users of the property. For example, a property that has a dedicated parking space may have a higher price than a property that does not have one.

5. Market Trends:

Market trends are another factor that affects real estate prices in India. Market trends refer to the prevailing economic and social conditions that influence the demand and supply of real estate in different regions and segments. Market trends may vary depending on various factors such as GDP growth rate, inflation rate, interest rate, employment rate, migration rate, urbanisation rate, government policies, consumer preferences, etc. 

Market trends may also change over time due to various events or developments such as natural disasters, pandemics, wars, reforms, innovations, etc. For example, the COVID-19 pandemic has affected the real estate market in India by reducing the demand for residential and commercial properties due to lockdowns, work from home, social distancing, etc., while increasing the demand for affordable housing, co-living spaces, co-working spaces, etc.

6. Technology:

One of the main ways that technology influences real estate prices is by increasing the efficiency and transparency of the market. Online platforms allow buyers and sellers to access more information about properties, compare prices, and find agents. This reduces the information asymmetry and transaction costs that traditionally affect the real estate market. As a result, buyers can find better deals, and sellers can reach more potential buyers. 

Another way that technology influences real estate prices is by creating new demand and supply factors. For example, technology enables remote work, which allows people to live in different locations than their workplaces. This can increase the demand for properties in suburban or rural areas, where prices are usually lower than in urban areas. On the other hand, technology also enables short-term rentals, such as Airbnb and VRBO, which allow homeowners to generate income from their properties. This can increase the supply of properties in popular tourist destinations, where prices are usually higher than in other areas.


These are some of the major factors that influence real estate prices in India. However, other factors may be specific to certain locations or segments, such as historical significance, cultural value, legal status, environmental factors, etc. Therefore, it is advisable to do thorough research and analysis before buying or selling any property in India.

Real Estate