Search activity for the residential sector has soared back sharply and in fact surpassed even the pre-COVID levels by 30-40 per cent in most markets.
The uncertainty caused by the Covid-19 pandemic has hurt the country’s overall economic sentiment with a much weaker GDP outlook and liquidity crunch, but has also thrown open a plethora of opportunities and interesting buyer’s trends in residential real estate. Demand is witnessing an upward surge towards affordable and mid-segment property, with a clear skew in favour of the ready-to-move-in segment post the lockdown, according to a recent report by Magicbricks.
The report says that search activity for the residential sector has soared back sharply and in fact surpassed even the pre-COVID levels by 30-40 per cent in most markets. This is due to a sustained acceleration of buyers shifting to digital-platforms as their primary mode of discovery and curation for their property needs.
In their April-June PropIndex, Magicbricks had reported that after falling by as much as 50 per cent in April, the consumer searches regained their pre-COVID levels by the end of June. This trend has had a continuing upward trajectory & surged to all-time highs for the residential sale market.
Although consumers in most cities have reduced their budgets, but they have not compromised on the size of the house. Anecdotally, the need for additional rooms in the homes is perhaps the most recent need of the working professionals, with the altered lifestyle of having to work-from home.
“Though it is too early to predict if this will be a sustained motivation for buyers, and whether developers will respond suitably to leverage this new normal, but it would be fair to say that the increased demand & online consumer activity is quite measurably there for the taking,” says Sudhir Pai, CEO, Magicbricks.
In fact, announcements of some confidence building measures by the Central and State governments have given the right push in helping the sector stay afloat. In particular, the extension of RERA deadlines, reduction in stamp duty and liquidity infusion in stressed projects through the SWAMIH fund (more than 100 projects approved till now) should help home buyers as well as developers.
Based on Magicbricks Research analysis, in the Jul-Sep quarter, the supply remained mostly muted and the overall prices maintained stable levels, while the platform witnessed a surge in searches & buyer-engagement.
At the city level, Bengaluru residential market has scaled back to normalcy as searches for property grew by 47% in Q3 after witnessing a fall of 14% in Q2 amid the COVID lockdown. During pandemic times, consumer preference in Benglauru was focused in peripheral areas. A clear demand shift was witnessed in the quarter, as searches increased for properties costing less than Rs 5,000 per sq ft.
Changes in Real Estate market sentiments during COVID-19
The Chennai residential market saw a modest recovery, with property searches having increased by 35% in Q3 2020, after a 22% dip in Q2 2020. However, the new supply in the market showed a negative trend due to restrained real estate activity.
With the COVID-19 crisis underlining the importance of owning a house, Mumbai witnessed a significant increase of around 52% in searches for residential homes in Q3 2020 that had in fact decreased by around 37% in Q2 2020. As majority of builders focused on completing ongoing projects with very few new launches, the city inventory overhang has been reducing gradually which is likely to help the stagnant market in the long run.
In the National Capital Region (NCR), both the Gurugram and NOIDA markets posted a marginal appreciation in prices. Gurugram showed a V-shaped recovery in demand during Q3 2020 after a decline of 25% in Q2 2020. With 28% QoQ increase in searches, the city witnessed strong growth during the July-September 2020 quarter. Despite a surge in demand, the new supply in the city remained muted amid uncertainty in market, labour shortage and pandemic scare.
The recovery in the residential market of NOIDA and Greater NOIDA was quite visible, with searches having surpassed pre-COVID levels during Q3 2020. The rebound in searches was primarily due to lifting of the lockdown and opening of economic activities. While the online searches for properties witnessed a dip of 18% in the Apr-Jun quarter, in the Jul-Sep quarter, searches bounced back to the pre-COVID level.
“Magicbricks Research foresees the next six months to be a crucial period for the residential segment. Resurgent demand and stable prices indicate that for now the residential sector has managed to stay off the panic mode, and with an expected early arrival of the vaccine for COVID-19, it should let the sector take its normal trajectory. We hope that the upcoming festive season would induce much needed enthusiasm in the home buying sentiment, improving transactions in the coming quarters,” says Pai.