The onset of the festive season has finally uplifted the consumer sentiment in the residential real estate industry as investors are making a comeback while looking for exciting deals.
Contrary to popular belief that realty transactions have virtually stopped during the pandemic-induced lockdown, industry data shows that property buyers are returning to the market. In fact, the number of property searches have already surpassed the pre-COVID numbers.
Magicbricks Property Buyer’s Sentiment Survey (3rd Edition) reveals that the onset of the festive season, after months of uncertainty due to the outbreak of the pandemic and the national lockdown, has finally uplifted the consumer sentiment in the residential real estate industry as investors are making a comeback while looking for exciting deals.
In the Property Buyer Sentiment Survey 1.0 (April 2020) and 2.0 (July 2020), job stability and price discovery were the primary concerns of people in property buying. However, the sentiment has changed significantly since then and in the Property Buyer Sentiment Survey 3.0 (October 2020), while the people are more certain about the prices, the festive season has also uplifted the sentiment. Beside, some of the supply side push such as all-time low interest on home loans and stamp duty waiver in some states also helped to push the fence sitting buyers to execute the transactions.
After peaking in Property Buyer Sentiment Survey 2.0 (published in July), the percentage of first-time home buyers has rationalized as per the Property Buyer Sentiment Survey 3.0. The increased buying frenzy amongst the first-time buyers is induced by the sudden realization of the benefits of owning a house in a COVID-like situation. In the last six months the market had seen a dip in the number of transactions but recent trends reflect recovery with consumer searches on the Magicbricks portal surpassing the numbers during pre-COVID months by 30%-40%.
The festive season led by attractive deals and discounts are also attracting investments into the market. “Our Property Buyer Sentiment Survey 1.0 and 2.0 had earlier indicated that investors had all but disappeared from the market amidst economic uncertainty. This seems to be changing with the festive mood, and now investors form one fourth of the intent to purchase a property. The trend was further confirmed by the increasing number of buyers looking for discounted/ distress deals and in the 3rd edition of the survey, more than 1/3rd of the buyers are looking to buy exclusively on availability of discounts, which coincides with the many deals launched by various developers across the country,” says Sudhir Pai, CEO, Magicbricks.
With the COVID-19 effect gradually fading off, only 43% of the buyers believe that the property price will decline henceforth, compared to ~75% respondents three months back. Thus, price volatility and getting killer deals are not likely to be a characteristic consideration of the buyer market any longer.
Silver lining for 2021
Pent up demand from 2020 along with anticipation of a volatile stock market has given an expectation of a healthy recovery for the real estate sector by 2021. Also with the reports coming in for a vaccine for Corona virus by early next year (by various international organizations), expectations have risen for a turnaround by the mid of next year.
Waves of uncertainty coupled with falling GDP have made most big-ticket investment options unfavorable to investors in the short term. At the same time, the residential real estate segment has shown resilience against price depreciation, falling under 2% at India level during lockdown (April-June 2020). As a result, property ownership is seen as a safeguard against value erosion in troubled times.
Thus, while the respondents believe that they may resist for another three months, 2021 may turn out to be a boom year as a result of pent-up demand of the last nine months.