The gradual recovery in the Indian residential sector, post the COVID-19 outbreak, was evident from the sale of about 33,000 units in Jul-Sep 2020; 2.5 times of the sales reported in Apr-Jun 2020.
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Showing signs of revival, residential real estate transactions improved by 50% during the July-September 2020 quarter, although property prices remained unchanged across top eight metro cities, according to 99acres.com.
As per the report, home buying sentiment improved as public sector banks and private players slashed home loan interest rates to a 15-year low. This, along with resumption of construction work, helped take the enquiries up by 80% of the pre-COVID times. Developers reported a 50% recovery in the number of transactions. The resale segment, however, remained under pressure with deals closing at a 2-5% discounted rate on average. With an addition of over 31,000 units in metro cities, new launches went up by 4.5 times, QoQ.
Speaking on the report, Maneesh Upadhyaya, Chief Business Officer, 99acres.com, said, “The Jul-Sep 2020 quarter set the pace for the recovery of Indian residential real estate market. Post an initial lull in sales and new launches in the previous quarter, the current quarter came as a breather as sales resurged by almost 2.5 times of the pre-COVID levels. Both Delhi NCR and Mumbai saw a significant improvement in transactions, QoQ, as end-users flocked to leverage the lucrative deals floating in the market. Price correction, unlike anticipated, remained a far cry; however, with a negotiation window of up to 10-15%, the deals closed in at a reduced price of 2-5% of the pre-COVID levels.”
The gradual recovery in the Indian residential sector, post the COVID-19 outbreak, was evident from the sale of about 33,000 units in Jul-Sep 2020; 2.5 times of the sales reported in Apr-Jun 2020, i.e. 9,700 units. Mumbai and Delhi led other metro cities in terms of sales volume and constituted about 29% and 22% of the total transactions, respectively.
The quoted property prices remained unchanged across cities. However, with offers, discounts and negotiations on the table, transactions closed at a corrected price of about 2-5 percent on an average. The worst affected were Chennai and Delhi NCR, which bore the brunt of a high disparity in demand and supply. Bangalore and Hyderabad were the only markets that sustained prices amid the pandemic and the resultant economic downturn due to the dominance of end-users and a favourable demand-supply equation.
With the markets opening up around mid-June, a few developers launched new projects, while the majority focused on completing and liquidating their ongoing projects. New launches went up by 4.5 times with the addition of around 31,000 units this quarter, as against 5,500 units in the previous quarter. Homebuyers, however, remained cautious of under-construction projects to minimise the risk in their investments. Ready or near-ready units garnered maximum traction. Unsold inventory dipped by a meagre one percent, YoY, and stood at 4.4 lakh units at the end of September 2020.
In the ensuing quarter, the festive season and the competitive home loan interest rates are expected to be the major propellers for the market.
Property enquiries from fence-sitting end-users went up in Jul-Sep 2020. The buyer community was boosted by the discounts floating in the market, and the sentiment to own a home that eases both social distancing and work-from-home. Resultantly, there was a noted increase in demand for builder floors and independent houses across cities. The affordable 2 BHK units in the price bracket of up to Rs 50 lakh garnered maximum demand, closely followed by homes priced within Rs 75 lakh.
The tenant community, too, reacted similarly to the ‘new-normal’ of the post-pandemic world and preferred independent homes to residential apartments. Enquiries and offtake of rented accommodations improved marginally, QoQ, as some businesses resumed normal functioning. Rental rates, however, remained largely unchanged across cities with Mumbai being an exception. The city reported a slight uptrend in the rental landscape, which was established by the fact that about 35,000 leave and license agreements were registered with the Inspector General of Registrations (IGR) in the months of August and September.
Affordable housing continued to be on the Government’s radar, with heightened focus on low-cost rental housing units. The former gained steam during the nationwide lockdown as migrant workforces returned to their hometowns. Resultantly, the average time to construct a home under PMAY came down to 45 days from 60 days, and about 18 lakh units were delivered during the pandemic.
The construction industry reported a surge in activities this quarter. The sector is expected to witness a strong recovery to the tune of almost 12% in 2021. Piggy-backed on this, the realty sector may also see a resurgence in demand, supply and absorption in the festive quarter of Oct-Dec 2020. With the government handholding developers, homebuyers and Housing Finance Companies (HFCs) through the tough times, the rebound is most likely on the cards. While the anticipation around price correction does not seem to die, lucrative schemes from developers are expected to keep the market afloat in Oct-Dec 2020.