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Home / News / India /  Second wave’s impact on home sales less harsh than in 2020: report

The impact of the second wave of the coronavirus pandemic has been more of a speed bump than a major obstruction for the residential market in India, even as home sales and launches fell in the April-June period compared with the previous quarter.

The first six months of 2021 (January-June) recorded sales of 99,416 residential units, up 67% compared with the first half of 2020, according to estate agent Knight Frank India’s ‘India Real Estate - Residential, January-June 2021’ report. Project launches numbered 103,238 units in the January-June period, a 71% surge over the corresponding period last year.

However, the highest number of sales and launches came in the January-March quarter on account of the stamp duty relaxation in Maharashtra, low home loan rates and pent-up demand after the pandemic’s first wave.

The second wave, which led to multiple regional lockdowns amid a health crisis, resulted in a sharp sequential drop of 62% and 43% in the volume of sales and launches, respectively, in April-June.

Of the 99,416 residential units sold in the first half of 2021, about 71,963 were sold in the January-March period and just 27,453 units in the June quarter.

Of the 103,238 units launched in January-June, only 27,232 units were launched in the June quarter and the remaining 76,006 units were launched in the January-March period.

“The gradual resumption of economic activity and increasing availability of the vaccine had sparked market traction in the second half of 2020 and this momentum carried over into Q1 2021," said Shishir Baijal, chairman and managing director, Knight Frank India.

“The second wave of covid-19 infections has impeded this momentum but should be seen as more of a speed bump as y-o-y (year-on-year) growth in market volumes remains strong in half-yearly and quarterly terms in the January to June 2021 period," said Baijal.

The temporary stamp duty cut, which spiked home sales in Mumbai and Pune, adequately demonstrates the need for similar measures elsewhere to revive the residential market, said the report.

As sales volumes stabilized, especially in the early part of the January-June period, unsold inventory decreased by 1% in the first six months compared with the same period last year. Prices remained mostly contained with a reduction of 1-2% on a y-o-y basis.

Sales in the affordable house segment, or homes below 50 lakh, were impacted by the uncertainties arising from economic disruptions caused by the second covid wave.

However, Baijal said the residential segment will remain buoyant due to the attitudinal shift in potential buyers, and as and when normality returns, the sales volumes should pick up pace.

During the early part of this year, sales volumes in key markets were skewed by Mumbai and Pune, which together made up more than 45% of the sales. However, this momentum got impacted by the second covid wave that began at the end of March.

“The reduction in repo rate, stamp duty, ready reckoner rate has been crucial in driving the sales momentum in the second half of 2020 and the first quarter of 2021. Post the stamp duty revision, lucrative offers from developers managed to sustain the momentum. Developers recalibrated their approach towards new launches to suit the current time, while developing properties that address the current new-age home buyers’ demand," said Rohit Poddar, managing director of Mumbai-based Poddar Housing and Development Ltd.

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