Property sales in Apr-Jun 2021 were badly hit as buyers exited the market temporarily as metro cities like Delhi NCR, Mumbai, Bangalore and Pune remained the worst impacted.
Housing enquiries and site visits came to a sudden halt in the top 8 metro cities in April and May 2021 with the resurgence of the second wave of COVID-19, according to a quarterly report by 99acres.com. As a result, property sales and new housing project launches took a severe hit and dipped by over 50 percent. Kolkata faced several other challenges in the face of the ongoing elections and the annulment of West Bengal RERA.
The recovery of the rental market was delayed yet again as the opening of offices and educational institutions got further extended. Any changes in the property prices were largely a function of the hefty negotiations in the resale market. The prices in the primary market remained undeterred as developers claimed limited profit margins amid rising input costs.
Speaking on the report, Maneesh Upadhyaya, Chief Business Officer, 99acres.com, averred, “Indian economy went through a tumultuous time in Apr-Jun 2021 battling one of the biggest healthcare crisis ushered by the unprecedented second wave of COVID-19. Like most sectors, transactions in the real estate market, too, came to a grinding halt in April with lockdown restrictions across the country. Subsequent to a reviving Jan-Mar quarter, which witnessed site visits, home enquiries and sales volume going up in both new home and resale segments, the months of April and May recorded a dip in numbers unheard of. Not surprisingly, as people battled for medical care and survival, sale-purchase of homes was put on the back burner. Responses on 99acres went down by over 25 percent in Apr-Jun 2021 against the previous quarter. Owner listings, too, saw a 5 percent degrowth as the seller community echoed the uncertain and grim marketsentiment.
Nevertheless, home enquiries picked up as active COVID caseload and lockdown restrictions dropped in June. 99acres too witnessed an upward trend in both owner listings and responses in the month followed by a two-month descent. In the subsequent quarters, no upward revision in lending rates and State specific subsidies on stamp duty and registration charges will help spur demand in the residential segment.”
The Indian real estate sector was caught off-guard in Apr-Jun 2021 with the onset of the devastating second wave of COVID-19. A higher rate of infection and fatalities brought the real estate business to a near halt yet again. Homebuyers took a back seat and completely avoided any site visits, especially in Mumbai, Delhi NCR and Bangalore. Deals on the verge of finalisation were put on hold. The overall housing sales dipped by over 55 percent, QoQ. Developers also deferred new launches indefinitely and ongoing construction activities were paused as migrant workers moved places.
June onwards, property enquiries started resurging. Independent houses or floors with access to terraces were seen gaining preference. Buyers interested in gated societies were willing to push their budgets up for an additional room to accommodate prolonged work-from home requirements.
The situation, however, does not look ideal for the residential rental and commercial real estate sector as reopening of offices was delayed further. On average, the residential rental market saw prices dwindling by about 1-3 percent, YoY.
The factors that kept the market afloat during the quarter were the governmental initiatives in the form of loan restructuring and tax rebates. The support provided to the developers for completing their projects in time is also expected to go a long way in maintaining the resilience of the market. Any price correction in the face of the crisis, however, has not been noted so far.
The realty sentiment saw a significant downturn in Apr-Jun 2021 due to the advent of the second wave of COVID-19.
Property sales in Apr-Jun 2021 were badly hit as buyers exited the market temporarily. Metro cities like Delhi NCR, Mumbai, Bangalore and Pune remained the worst impacted. Overall, housing sales dwindled by over 55 percent since the previous quarter when total sales across the top eight metro cities numbered close to 60,000 units. Tier II and III cities also took a massive dent in property sales, which dipped from a monthly average of around 14,000 units in Jan-Mar 2021 to almost 6,000 units in Apr-Jun 2021.
The low-income segment homebuyers, with an annual income of Rs 3-6 lakh, were reportedly the worst hit by the pandemic. Home loan disbursals in this category dipped by around three percent since FY 2020. The high-income segment (annual income above Rs 18 lakh), on the contrary, saw a two percent increase in home loan approvals. These figures persist despite a temporary lull in the sales of premium housing units in Apr-Jun 2021.
New launches remained grim as developers feared poor response rate and faced massive liquidity constraints. The struggle to even keep up with the construction of ongoing projects was evident from the consistent requests being raised to extend the completion timelines under RERA. Hyderabad, Bangalore and Kolkata saw the biggest dent of over 50 percent in the new project registrations under RERA in Apr-Jun 2021. Unlike other cities, Kolkata’s realty market faced several growth detriments this quarter, such as the ongoing elections and the annulment of West Bengal RERA.
The rental market suffered across cities with average rates dwindling by 1-3 percent in Delhi NCR, Mumbai, Bangalore, and Chennai. The market is expected to bounce back once the offices and colleges reopen in a few more months.
