The real estate market is going through a challenging phase as it scraped through a nationwide lockdown and is still struggling to get its lost momentum back as the nation enters Unlock III. Luck hasn’t been on the side of the property sector as property sales slowed down by almost 80% post lockdown and construction halted all of a sudden due to the exodus of workers from cities.
One can say that the Real Estate Sector after confronting negative market forces and enduring structural reforms over the past couple of years has become battle-hardened and is now capable of weathering the bad times with a steely determination.
The situation now is another test for the real estate sector and a crucial one as it tackles an invisible force and enters a new digital ecosystem to enable business continuity. Real estate developers riding on the potential of online real estate platforms have managed to register stupendous sales, but the overall nationwide housing picture is still bleak.
Positive sentiments work in favour of Southern property markets
According to a recent study, before the pandemic erupted, 10 out of 12 key property markets showed positive momentum. However, the nationwide lockdown and the ongoing pandemic deflated that momentum, which resulted in dwindling Property Sales. Real estate developers looking at the subdued demand took to price correction measures where 1-2% price decrease in property rates have been noticed in Tier 1 cities.
Though this is a good tiding for immediate homebuyers (coming on the back of cheap home loan rates), it couldn’t make much noise on prime markets like MMR, Delhi, Gurgaon, Noida and Pune. However, markets in South India like Hyderabad, Bangalore and Chennai witnessed a surge in property sales post lockdown.
Studies suggest that strong underlying market fundamentals in these cities to be the main reason for positive sentiments among homebuyers. More than 50% of homebuyers living in these cities were certain of price movements owing to the outbreak of the pandemic. Let’s see why these markets have the tide in their favour.
Bangalore: The Garden City surely has rock-solid market fundamentals and enjoyed healthy year-on-year growth for the past five years with good demand and supply balance. The city saw 17.7% and 33.3% growth in ready-to-move and under-construction properties. But the property market took a dent after Covid happened with a 3% correction in property prices. A reduction of stamp duty on properties up to 35% and Online Property Booking facilities have rubbed off well on homebuyers looking for affordable homes. These developments are expected to make a positive impact on homebuyers and keep the market hot in the months to come.
Chennai: A strong focus on affordable properties has helped the Chennai property market witness a positive demand even in these unprecedented times. This initiative by real estate developers of erecting affordable projects along prime employment hubs has worked in their favour as they are able to cater to the pent-up demand that erupted post Lockdown.
Hyderabad: The Hyderabad residential market has been a consistent performer and enjoyed steady growth over the past few years. The sudden invasion of the pandemic led to a steep fall in property prices by 5.2 % though. The cancellation of an increase in stamp duty and registration charges by the government will spur demand for properties and warm up the confidence of homebuyers. Also, attractive sops like no EMI until possession has also pulled homebuyers to invest in properties now.
Looking at the positive sentiments of homebuyers towards the property sector, one can arrive at the truth that green shoots have started emerging in the real estate sector, starting from the Southern markets. This development will warm up the confidence of the realty sector; at the same time developers in key markets should take cues from this positive trend and speed up construction of affordable 1BHK & 2BHK homes to bring back the demand to those markets. As ready-to-move homes are in serious demand of late, attention should also be given to the same to cater to immediate homebuyers.
