8 Housing Market Predictions for 2023

The real estate industry is a crucial catalyst in any economy, impacting various aspects, such as consumer spending and financial stability. Here are a few projections for those curious to know what the rest of 2023 has in store for the real estate market.

Overview of the real estate market 

It was projected that the demand for residential properties in the top 8 cities of India will increase by over 15% YoY by the end of 2022, with similar growth expected in 2023. This growth is not limited to only the metropolitan areas, with tier-2 cities such as Nagpur, Coimbatore, Bhubaneshwar, Indore, and Jaipur also experiencing a surge in real estate development.

The momentum for end-user demand is expected to remain steady, leading to an estimated increase of 10-15% in residential demand in 2023. An increase in supply will accompany this growth, as many large developers are purchasing new land and preparing for significant project launches. Additionally, customers are embracing digital technology and environmental awareness, changing how homes are constructed, marketed, and valued.

Increase in property technology adoption

In 2023, the use of proptech is expected to increase even further, making it less cumbersome and more convenient for customers to find and finalise their dream homes. Real estate companies are adapting to the changing market and introducing "full-stack services" to meet the demand for a seamless home-buying experience. Proptech tools, consisting of 3D tours, project videos, and comparison tools, have become increasingly popular when searching for properties. These tools help customers make informed decisions when shortlisting properties from a wide range of options. When finalising a property, customers are looking for easy access to financing tools, legal and valuation assistance, and other AI-powered services just a click away. Moving in can also be a hassle-free experience, courtesy of services such as decor tools and packers & movers that are 3D enabled. 

Companies like ours in the real estate industry already offer a whole stack of services, providing customers like you with relevant advice and Proptech tools to assist you in your decision-making journey. At Blox, we ensure prospective homeowners can buy homes from the comfort of their homes, making it a stress-free experience for all involved.

Increasing demand for smart homes

Thanks to technological advancements and modern lifestyles, the demand for innovative and connected homes is rapidly increasing. Many tech-savvy customers invest in IoT-enabled homes for convenience and a hassle-free home experience. According to Frost and Sullivan, the Indian IoT market is expected to reach US$9.28 billion by 2025. The pandemic has also accelerated the demand for smart appliances, with an estimated 2 billion connected devices in Indian homes in 2021. In 2023, innovative home technology is expected to disrupt the real estate industry, creating worthwhile opportunities for designers, builders, entrepreneurs, and investors. 

Developers providing properties with pre-installed smart appliances will be able to tap into the affluent segment of customers and enjoy high demand. Systems such as whole-home automation and touchless interactions, such as kitchen chimneys that are loT enabled, ceiling fans, and AI-monitored water purifiers, will drive efficiency and save energy, making them an attractive choice for conscious customers.

Co-living and co-working spaces 

As the Indian economy is increasingly dominated by millennials, the real estate industry is adapting to their modern lifestyles and addressing the challenges of urban density through offerings such as co-living and co-working spaces. These models aim to foster collaboration, innovation, and social interaction, creating a massive business opportunity for developers and investors, estimated to be worth INR 1 lakh crore by 2023, per a FICCI report in 2019. Co-living is especially popular among working professionals who prefer fully furnished, serviced homes with lifestyle amenities, while co-working spaces are highly sought after by corporates, entrepreneurs, startups, and individuals looking for a place to network, innovate, and collaborate with their peers.

Rise of eco-friendly and sustainable real estate developments

Finally, there is a growing consciousness about balancing real-estate development with the environment. India has witnessed a 31% increase in green real-estate assets across six cities in the past decade, and real estate developers who invest in green building materials, energy-efficient lighting, and onsite renewable energy systems will enjoy customer interest. According to estimates, the green building sector will present an investment opportunity of US$24.7 trillion by 2030. Real estate is a key industry of the economy and has the potential to champion the cause of prioritising the planet over profit. It can play a fundamental role in helping India achieve its commitment to reducing its carbon emissions by 2030 by one billion tonnes and attaining its net-zero target by 2070.

Affordability will be a major concern.

With home prices rising, affordability will become an increasingly pressing issue for many buyers. This holds particularly true for first-time buyers, who may struggle to find homes within their budget. To address the housing market price issue, we may see more government programs to make homeownership more accessible. 

Affordable housing has been a key focus for the Indian government in recent years, and this trend is likely to continue in 2023. The government's Pradhan Mantri Awas Yojana (PMAY) program, which aims to provide affordable housing for all, is likely to continue driving growth in this segment.

High Housing demand and low inventory levels 

Despite a surge in demand over the past year, housing experts believe that demand for homes will remain high in 2023. This is due to multiple reasons, such as a growing population, low-interest rates, and a strong economy. Interest rates are a key driver of the housing market and are expected to remain low in 2023. This is good news for buyers because they can secure lower mortgage rates. However, it also means that competition for homes is likely to remain fierce.

The fact that inventory levels are low is also a key factor driving up home prices. Many homeowners prefer staying in their homes rather than selling, leading to a shortage of available properties. While new construction could help address this issue, catching up with demand will require some time. 

Urban areas may see a shift in demand.

In the last 12 months, there has been a noticeable shift in individuals relocating from bigger cities to find larger living spaces and more affordable expenses. This trend may continue in 2023 as remote work becomes more common and people prioritise access to outdoor space.

Conclusion

As we look ahead to 2023, the Indian real estate market appears poised for growth and evolution. From affordable housing and sustainable development to co-living and co-working spaces, the market is set to offer new opportunities for buyers, renters, investors, and developers alike.

While there are always uncertainties and potential challenges that may arise, such as policy changes or economic fluctuations, the overall outlook for the Indian real estate market is optimistic. As technology continues to transform the industry and infrastructure development drives growth, the market is expected to become more diverse and dynamic than ever before.

Staying informed and adaptable will be key to success in this evolving market. By keeping an eye on the trends outlined here and anticipating changes that may arise, investors and developers can position themselves to thrive in the years ahead.