Despite second wave damage homes sales stay strong in Q1

by mehekkaoberoi

Background:-

  • The Corona pandemic last year had taken the world by surprise and proved to be extremely strenuous for businesses and industries.
  •  While all industries made efforts to tide over the problem, it was real estate which showed remarkable resilience and embraced technology in a major way to witness a sharp recovery in the second half of last year.
  • The second wave has slowed down that recovery process to an extent. A section of the prospective home buyers is adopting a wait-and-watch-approach till the current wave ebbs.
  • However, the ongoing wave of corona virus is proving to be less tumultuous for the real estate industry as developers had resorted to digitization during the last year’s lockdown and the ensuing months which is helping them to be in constant touch with the customers, take action upon the digital leads generated and promise them at least a virtual experience of their future home.
  • The latent housing demand is huge as evidenced by the sound sales revival seen during and after the first wave.
  • We, therefore, hope to see some recovery in 3QCY2021 if cases continue to reduce. Meanwhile, construction activity is still going on, albeit in a limited fashion. Ongoing project construction bodes well for homebuyers.

Linkages:-

  • The real estate sector is better prepared now and has already adapted to digital tools. Rapid inoculation drives are also boosting confidence and the situation is not as bad as it was in April 2020.
  • Mumbai metropolitan region and pune continued to drive a massive share of housing sales during this quarter with 46% share of the total sales.
  • MMR bangaluru and pune together accounted for 74% of the sales in this quarter.
  • The spillover effect of stamp duty reduction benefit offered by the government of Maharashtra helped in maintaining the sales momentum as homebuyers had a four month window to execute their delas after paying the charges.
  • Sales activity is showing resilience but the momentum is declining. All the factors including low interest rates demand and the deal sweeteners from developers that led to robust growth in second half of 2020-21 continue to be around.
  • The previously noted structural shift in housing demand continues as many current homeowners are seeking to upgrade larger homes and the previously purchase – averse millennial remain very active property buyers.

Current Scenario:-

  • The second wave and subsequent lockdowns across the impacted housing sales,But the market continue to exhibit resilience with healthy growth in activity over last year.
  • The Indian real estate sector is now a buyers’ market and the ongoing inoculation program is boosting the confidence of homebuyers. It is most likely that the sector will resume its growth from the second quarter of FY 2021.
  • Housing sales across the top seven property markets in India rose 93% from a year ago to over 24,570 units in April June quarter when the first lockdown was announced and the real estate market plummeted.
  • While the low base effects indicates almost doubling of sales, numbers have declined 58% from the previous quarter.
  • However, the ongoing wave of corona virus is proving to be less tumultuous for the real estate industry as developers had resorted to digitization during the last year’s lockdown and the ensuing months which is helping them to be in constant touch with the customers, take action upon the digital leads generated and promise them at least a virtual experience of their future home.
  • Technologies like 3D Walkthrough of the properties, Augmented Reality (AR) and Virtual Reality (VR) have been deployed by the industry players, obviating the need for home buyers to physically go and check the properties.

Impact:-

  • The second Covid-19 wave definitely impacted overall residential property market activity in second quarter this year when juxtaposed against the preceeding quarter.
  • The demand for housing in India might also impact amid a change in stance in the banking system.
  • The real estate sector has staged an impressive growth in 2021, but the second wave of Coronavirus has impacted the pace.
  • Health and well-being are the topmost priority and in such a case, companies have been banking on digital tools and platforms.
  • They are focusing on virtual tours and digitally-enabled marketing activities.

Content contributed by- Vaishnavi Dahivalikar

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