The lockdown recession has hit almost every sector and every economy in the world and India is no different. The number of cases seems to be alarming and social distancing is the new normal now. The Indian economy, which seemed to be staying afloat in the beginning, has now been projected to be walking towards a 4.5% contraction by the International Monetary Fund (IMF).
In the new economy that emerges out of this, where will a sector like real estate, the second largest contributor to India’s GDP, stand? Let’s reflect.
The lockdown effect on the Indian real estate sector
- According to a report, in Q2 of the current financial year, new supply and absorption of existing supply in the real estate sector both declined by about 80% as compared to the same period last year.
- In the first half of the current calendar year, only around 88,593 homes were sold in Tier 1 cities, which counts as a 52% year-over-year decline.
- Sales of houses in the nine major cities of India fell by 79% in April-June 2020 alone, with 81% lesser project launches.
- Both construction and sales have come to a complete halt with construction workers moving back to their native lands. Even after the pandemic, activity will pick up gradually and we can easily expect delays of 6 months.
Additional Read: Effects of Coronavirus Pandemic on Real Estate Sector in India
Despite these figures, a lot of experts are sensing hope for the revival of the Indian real estate sector in the next few months. Why? Festivals, of course!
The festive effect on a post-pandemic real estate industry
The festive season, starting after August every year, is always heralded by industries, advertisers, and buyers alike as a time of prosperity. With major festivals like Ganesh Chaturthi, Diwali, Navratri, Christmas, and New Year packed in a few months, sentiments are highly optimistic in this period. People buy a lot, industries sell a lot and advertise a lot. It’s a win-win for everyone. You must have read news articles predicting that a certain sector which was facing a slump in the beginning of the year can be expected to pick up pace in the festive season almost every year.
This year, it’s not just any festive season. It’s a post-pandemic festive season. Here’s why you can still expect good post-pandemic housing prices and a new life to the Indian real estate sector within the next few weeks (based on the recent Housing.com-NAREDCO sentiment survey)
- In a recent sentiment survey, 80%+ prospective buyers said that they want to purchase a house within the ongoing financial year.
- Owing to the volatility and uncertainty of investments such as gold, stocks, etc., real estate is slowly emerging as the most preferred asset.
- More than 40% of the people surveyed want to upgrade their houses for a work-from-home future. A greater number of people are preferring larger houses (2BHKs and 3BHKs).
- Staying indoors is making people realize the safety and security of a home more than ever before.
- Home loan interest rates have dipped to almost a 15-year low. They are now around 6.70% only.
- Even developers have been offering attractive post-pandemic housing prices and schemes. These include price protection schemes, innovative payment methods, and even flat discounts on property prices. These include 5-10% discounts, no EMI until possession, etc.
- There is some support from state governments too. Maharashtra government has reduced stamp duty on property registration till December 2020, and so has the Karnataka government. With the dip in revenues, more states are expected to adopt similar measures.
- Developers are using innovative methods which are taking the sector a few steps ahead. These include drone shoots, walkthrough videos, virtual tours, video calls, webinars, etc. Digitization is all over the place.
- Quite a few big-ticket deals have already been closed on the auspicious occasions of Onam and Anant Chaturdashi, and the upcoming festive season is only signaling better days.
- There is no end to the offers on post-pandemic housing prices. Developers under the Naredco (National Real Estate Development Council) in Maharashtra have offered to pay stamp duty on behalf of customers. Some are offering freebies such as laptops, household appliances, phones, etc.
Additional Read: Changes in Home Loan Interest Rates After Coronavirus
It is a buyer’s market now, whether you consider post-pandemic housing prices or home loan offers or state measures. If you want to welcome the lockdown festivities with some cheer and have enough finance for it, buy a new property.
Buying a new home would surely begin by hunting for a home loan. Look no further than Tata Capital’s Home Loan extending from Rs.2 lakhs to Rs.5 crores, and an easy, seamless process with minimum documentation.