The raging second wave of the pandemic has hit India’s residential property market, with new home sales set to fall sharply this quarter as potential buyers defer plans and companies put off new launches
The raging second wave of the pandemic has hit India’s residential property market, with new home sales set to fall sharply this quarter as potential buyers defer plans and companies put off new launches.
This has dampened a recovery of the sector seen till March supported by government sops in some states, lower borrowing costs and pent-up demand.
In states such as Maharashtra, which includes the Mumbai Metropolitan Region (MMR)—India’s most valuable property market—the withdrawal of a waiver on stamp duty added to a drop in property registrations in April.
Property registrations in Mumbai plunged 42% in April to 10,136 units from 17,449 in March amid the withdrawal of the stamp duty waiver and the second wave of the pandemic. Of the total, only 7% were new property registrations, while the rest were of properties sold during the December to March period.
“We expect home sales to see a big drop, by 25-30%, in the April-June quarter. Until the second wave, sales in the last few months were driven by stamp duty waiver and pent-up demand. With the second wave, the impact will be significant," said Pankaj Kapoor, founder and MD, Liases Foras Real Estate Rating & Research Pvt. Ltd.
India’s top eight property markets saw a 32% sequential growth in home sales in the March quarter at 69,697 units, according to Liases Foras.
Meanwhile, developers and real estate consultants expect the slump in home sales to continue but are hopeful of rebound in the second half of 2021.
Mohit Malhotra, MD and CEO, Godrej Properties Ltd, expects the second wave to disrupt the residential property market over the next three to four months but said the long-term outlook remains strong.
“There was significant volume growth post lockdown last year and we believe that will continue in the long term," he said.
Developers were also expecting the recovery seen till March to drive an increase in property prices. “We need sustained volume growth for a couple of quarters before one can realistically expect price hikes to happen," Malhotra said.
With the sales momentum expected to stay weak in the near term, some developers have started postponing project launches. Sanjay Dutt, managing director and chief executive, Tata Realty and Infrastructure Ltd (TRIL), said the company has temporarily closed its sales experience centres, though it is continuing online transactions. “We saw our highest-ever sales in 2020-21 and January-March was the best-performing quarter. We expect similar momentum in 2021-22 though there may be a shortfall in June quarter sales," Dutt said.
“There was huge pent-up demand until March...but the second wave will have a severe impact on sales. Fence-sitting is back as homebuyers are taking time to decide," said Vinod Menon, founder and CEO, Citrus Ventures, a Bengaluru-based real estate developer.
Mani Rangarajan, group COO at Housing.com, Makaan.com and PropTiger.com, said covid’s resurgence and curbs in many states may put brakes on the revival of housing demand. “Though it is early to assess the impact, the industry is more prepared this time. The sector has taken a giant leap in adoption of digital tools for marketing and sales during the last one year," he said.
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