The real estate sector was hoping for a turnaround from the festival season, and he festivity did not let the sector down.
After Q2 2021, a lot of optimism seeped into the real estate sector; the sales started picking up from June 2021. The sector was hoping for a turnaround from the festival season, and it would be right to say that the festivity did not let the sector down. The latest reports indicate that the new launches and sales have picked up tremendously during the July-September 2021 quarter. However, the festival has not yet ended and looking at the momentum, and the sector will come out smiling.
Sales in this period are now primarily driven by developers and lending banks rolling out the most attractive offers of the entire year during the festive season. According to Real Insight (Residential): July – September (Q3) 2021 by PropTiger.com, home sales and new launches have both shown a significant improvement in the period between July and September 2021.
The festive season has been an annual high point for the real estate sector; the buyers/investors consider it an auspicious time to invest in wealth-creating assets. This year, the pandemic-induced necessity has also made the sector gain. Since the first wave, the demand has been increasing, but on and off movement restrictions delayed the buying processes. Since May 2021, the ease in restrictions made the people go property hunting, which is now reflected in the encouraging sales figures across the country.
While traditional sentiment played its role, the enhanced affordability backed by all-time low home interest rates and offers was crucial in making even the fence-sitters make a move. In various reports by property consultants, it was evident that affordable housing benefitted the most from the scenario. The segment made up for more than 30% of the sales.
Even if we look at the new launches, which saw an almost 200% jump in Q3 2021, the maximum number of launches were below Rs 45 lakh, making up 32% of the total new launches. There is also a lot of demand for homes from those who were previously comfortable with renting. One of the most distinguishing characteristics of today’s housing demand is that even millennials are looking to buy a home.
The pandemic intimidated people as it gave the impression that people had little control over what was happening. Images of deaths and thoughts of financial instability made people stare at the uncertainty as their investments lost value. People crave a sense of security and homes as their first line of control. The renting generation, which preferred other investment tools over real estate, realized the stability of the real estate assets that helped the sector see a jump in demand.
Even before the virus is fully contained, the long-awaited real estate revival has begun. Now, the increased demand will drive up the real estate value, and increased spending and lower inflation will drive up loan rates. The time is right for the people to take a quick decision before the laws of the market start to dictate. Nonetheless, the fundamentals for a rebound are robust as the demand is high, especially for the residential segment currently driven by the end-users.
The RBI and government help is needed to sustain the positive sentiment; the authorities must announce newer incentives or extend stamp duty and circle rate waivers to ensure that the demand remains intact well after the festive season.
(By Rajat Goel, JMD, MRG World)