New home sales shoot up: Has real estate sector beaten pandemic’s curse?

By: |
November 19, 2020 6:07 PM

Supportive measures such as a reduction in stamp duty by a few state governments have shot up new homes sales.

homebuyers, new homes, real estate, realty sector, pandemicThe favourable interest rates and a fall in property prices have made the home 35 per cent more affordable in India’s Top-10 cities in the past five years.

New home sales have seen a sharp rise in recent months, giving a sigh of relief from the pandemic-led worry across the realty market. New homes sold in Mumbai and the rest of Maharashtra are 10-30 per cent higher in October, compared with January this year. It is believed that supportive measures from a few state governments such as Karnataka and Maharashtra have led to the phenomenon, according to a report by Crisil Research. While Maharashtra had cut stamp duty from 5 per cent to 2 per cent up to December 2020 and to 3 per cent for January-March 2021, Karnataka had also slashed it from 5 per cent to 3 per cent for homes priced between Rs 21 lakh and Rs 35 lakh.

The favourable interest rates and a fall in property prices have made the home 35 per cent more affordable in India’s Top-10 cities in the past five years, the report added. Despite a bigger fall in annual household income as compared to the residential prices, affordability increased in 2020. On the other hand, a sharp decrease in the cost of funding pushed average home loan rates from around 8.9 per cent in 2019 to 7.5 per cent in 2020, said another report by JLL.

Among major cities, affordability improved around Mumbai, NCR and Pune more than other metro cities such as Bengaluru and Hyderabad because of pricing pressure. Here, the first-time homebuyers, fence-sitters, and resale flat buyers have received a favourable, buyer-centric market.

Meanwhile, profits of the realty companies are concerned, the quarterly results of key listed players showed better than expected growth in the Q2 FY21, while in most cases, bookings for these players touched pre-Covid levels. The Crisil Research estimated that the momentum may continue in the second half of this fiscal. Meanwhile, the overall rebound in real estate demand in October was faster than expected earlier, however, its sustenance post the festive season will be monitorable. On a full-year basis, it is expected that overall primary sales may witness a fall of 40-50 per cent in the top 10 cities.

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