News was abuzz that the coronavirus pandemic is just a short-term blip on the housing market radar. But as the months went on, this truth became a misnomer as housing sales tapered off and property price corrections became headlines.
The real estate market faced an unreal nationwide lockdown when its business dried to a trickle. While this came as a brutal surprise for the property sector that was taking baby steps towards a comeback, its fear of another collapse was allayed when sales picked up with the unlocking of the economy in phases.
However, the comeback picture was not uniform across India as disruptions in construction material supply lines and labour shortage resulted in construction delays and stall of new & under-construction housing projects. This led to unnecessary piling up of housing inventory across the country.
With skeptical homebuyer sentiment and huge funding gap looming over medium to small scale developers, the already languishing residential real estate market was bound to go the property-price-correction route looking at the dismal sales figures.
Price corrections for all sectors in major cities
The residential sector has been badly mauled by the Covid crisis. The homebuying cycle is massively impacted and this has taken its toll on the real estate transactions. But the interest of home buying hasn’t gone through. According to a survey, 60% of homebuyers are still looking to buy homes within this year while the other 40% have postponed their plans.
However, uncertainty in the market, job cuts and fear about how the virus will pan out have led homebuyers to put a rain check on their purchase decisions. This has led to a collapse of property prices in major cities like Mumbai, NCR, Hyderabad, Bengaluru, Pune, etc by 10-15%. Some high-end regions of MMR have witnessed a price contraction of 25-30%.
The luxury sector took a major part of the blow as homebuyers focused more on affordable housing and reduced discretionary spending. Mid-income projects in the range of 40-80 lakh saw slight price reductions as attractive payment schemes and demand for bigger homes acted as a primary driver for sales. Though affordable home sales picked up handsomely with the reopening of the economy, the unpredictability of the virus and tightening economy has made homebuyers to rethink their decisions.
A lifetime opportunity waits for homebuyers
The price correction phenomenon across properties in India has triggered a never-before-seen opportunity for homebuyers to realize their big-ticket dream. Homebuyers can stretch their homebuying ambitions and buy bigger homes at lower prices.
Reduced property values, attractive pre-payment plans and rock-bottom loan interest rates augur well for the affordability of homes. Homebuyers who were tired and jaded after staying boxed up in their homes can be at an optimistic end and buy homes with alacrity.
Property prices will continue to level out and become more affordable with the onset of the festive season as real estate developers will look to replenish their cash reserves and clear off existing inventory. With demand for new units showing a gradual decline, the flow of liquidity from selling ready-to-move units will act as a cushion for developers too.
For home buyers, this is the most opportune moment to get hold of a property, as we are looking at a price correction after a prolonged period of range-bound movement.
