How Haryana Elections 2024 will impact personal finance and real estate investments

By Pradeep Mishra

As the 2024 Haryana elections draw near, the state’s real estate sector faces a period of uncertainty and cautious activity. For investors and homeowners alike, understanding how these elections might influence the market is crucial to making informed financial decisions. This article delves into the various ways the election could impact real estate in Haryana, with a particular focus on personal finance.

The Election Effect: Delays and Uncertainty

One of the most immediate impacts of the election season on real estate is the enforcement of the Model Code of Conduct (MCC) by the Election Commission. The MCC, designed to ensure free and fair elections, often results in delays in obtaining critical approvals such as licences, RERA registrations, and Occupancy Certificates (OCs). For developers, these delays can slow down project timelines, increase holding costs, and ultimately affect project delivery. For potential homebuyers, this translates into postponed possession dates, which can disrupt personal financial plans, particularly for those relying on home loans or who need to vacate their current residences.

Hesitant Market: No New Project Launches

During election periods, developers and investors typically adopt a “wait and watch” approach. This hesitation is driven by the uncertainty surrounding election outcomes and potential policy changes. As a result, new project launches often grind to a halt. For investors, this pause can mean fewer opportunities to enter the market at attractive prices. On the other hand, for existing homeowners looking to upgrade or sell, this stagnation can lead to lower buyer interest and potentially longer periods on the market, impacting liquidity and financial planning.

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Stalled Infrastructure and Development Projects

Infrastructure development is a key driver of real estate value. However, during elections, projects such as road construction, public transportation enhancements, and other urban development initiatives are typically put on hold. This delay can have a ripple effect on real estate prices, especially in areas where infrastructure upgrades are critical to boosting property values. For investors and homeowners, the slowdown in infrastructure improvements could result in delayed returns on investment, particularly in emerging areas that rely on these developments to attract buyers.

Impact of Delayed Policy Announcements

The MCC also restricts governments from making new announcements related to development projects, leading to a temporary lack of fresh information that investors and developers rely on to plan their strategies. Additionally, draft policies that are in the pipeline often get delayed until after the elections. This creates uncertainty, especially for those involved in projects that depend on specific regulatory changes or approvals. For real estate investors, this could mean holding off on investments until there is more clarity, potentially missing out on market opportunities or facing higher costs later.

Legal Uncertainties: The Stilt + 4 Issue

Adding another layer of complexity is the ongoing court case regarding the Stilt + 4 construction issue, with a crucial hearing scheduled for early September. The outcome of this case could significantly impact how multi-story residential projects are developed in Haryana. For those invested in or planning to invest in such projects, the court’s decision could alter the financial viability of these investments, either enhancing or diminishing their value depending on the ruling.

Property Prices and Market Activity

Election periods are typically marked by low transaction volumes as buyers and investors adopt a cautious approach. This slowdown can lead to stagnation or even a temporary dip in property prices. For homebuyers, this could present a rare opportunity to negotiate better deals, especially if they are willing to take on the risk associated with election-related uncertainty. However, for sellers, this period might require patience, as the pool of potential buyers shrinks and offers may come in below expectations.

The Post-Election Market Surge

Despite the uncertainties during the election period, the market generally remains stable, with most players opting to observe and react after the results are announced. Historically, the period following an election can see a surge in market activity as new policies are introduced and the political landscape stabilizes. For those with a long-term investment horizon, this post-election period could offer significant opportunities as the market adjusts to the new government’s priorities.

Affordable Housing: A Critical Sector at Risk

Affordable housing, a crucial segment in Haryana’s real estate market, may face delays in subsidies and incentives during the election period due to the MCC. This could slow down momentum in this sector, particularly affecting middle and lower-income groups who rely on these incentives to afford housing. For potential buyers in this segment, it’s important to be aware of these potential delays and plan accordingly, perhaps by securing financing options that can accommodate extended timelines.

Shifts in Political Priorities

Depending on the outcome of the elections, the new government may shift its focus to different areas of development, such as rural versus urban infrastructure. Such shifts could influence where real estate growth is concentrated, requiring developers and investors to adapt quickly. For individual investors, staying informed about these potential changes is essential to making timely decisions that align with the new political priorities.

Consumer Confidence and Market Sentiment

Public sentiment during elections often swings towards caution, affecting consumer confidence in the real estate market. Potential buyers may choose to delay their decisions, leading to lower sales, especially in the residential sector. This hesitation can affect sellers looking to offload properties and developers relying on sales to finance ongoing projects. For those actively participating in the market, understanding these sentiment-driven fluctuations can be key to timing transactions effectively.

Potential Policy Changes Post-Election

Once the new government is in place, there is the possibility of significant policy changes that could impact the real estate sector. These changes might include modifications to property taxes, land acquisition laws, or urban planning regulations. Investors and homeowners need to stay vigilant and be prepared to adapt their strategies to align with these new policies, which could either enhance or challenge their financial plans.

Foreign Direct Investment (FDI) Concerns

Foreign investors typically prefer political stability before committing large investments in real estate. The election period might see a slowdown in FDI inflows into Haryana’s real estate sector, affecting funding for large-scale projects. For developers dependent on FDI, this could lead to delays or changes in project scopes, impacting overall market dynamics and investor confidence.

Adapting Marketing Strategies

Developers often adjust their marketing strategies during election periods, focusing on long-term benefits rather than immediate sales. With the market adopting a cautious stance, promotional activities may be subdued, leading to a quieter market presence. For those involved in marketing real estate, this period calls for innovative strategies that can maintain consumer interest without relying on traditional high-pressure sales tactics.

Speculative Buying and Selling

Election periods can lead to speculative behavior in the real estate market. Investors may try to capitalize on potential post-election market shifts, leading to short-term fluctuations in property prices. While this can create volatility, it also offers opportunities for those who are well-informed and willing to take calculated risks. For the average investor, however, it’s important to approach such speculation with caution to avoid potential losses.

Environmental Compliance and Delays

Lastly, environmental clearances, which are crucial for large developments, may face delays during the election period as political attention shifts. This can stall project progress, particularly for developers focused on sustainable and eco-friendly developments. For investors in these projects, understanding the potential for delays and incorporating this into financial planning is crucial to avoiding unexpected costs or losses.

Conclusion: Navigating the Uncertainty

As the 2024 Haryana elections approach, the real estate sector is poised for a period of uncertainty. For investors, homeowners, and developers, understanding the potential impacts of the elections on project timelines, market dynamics, and personal financial planning is crucial. By staying informed and adapting to the evolving political landscape, stakeholders can navigate this period with greater confidence, positioning themselves to capitalize on opportunities that may arise post-election.

(The author is CMD, Oram Developments)

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