Home sales in the 8 main metropolitan cities fall 55% with 60,000 units sold in April-June 2021
Housing inquiries and site visits suddenly came to a halt in the top 8 metropolitan cities in April and May 2021 with the resurgence of the second wave of COVID-19, according to a quarterly report from 99acres.com. As a result, property sales and new housing project launches have been hit hard and have fallen by more than 50%. Kolkata faced several other challenges in the face of the ongoing elections and the cancellation of the West Bengal RERA.
The recovery of the rental market was again delayed by the extension of the openings of offices and educational establishments. Any change in real estate prices was largely a function of tough negotiations in the resale market. Pricing in the primary market was not deterred as developers demanded limited profit margins amid rising input costs.
Speaking on the report, Maneesh Upadhyaya, commercial director of 99acres.com, said: “India’s economy went through a tumultuous period in April-June 2021, battling one of the biggest health crises triggered by the unprecedented second wave of COVID-19. Like most industries, transactions in the real estate market were also halted in April with foreclosure restrictions across the country. After a rebound in the January-March quarter, which saw site visits, inquiries and sales volume increase in the new home and resale segments, the months of April and May saw a boom. drop in unprecedented numbers. Unsurprisingly, as people fought for medical care and survival, the buying and selling of homes was put on the back burner. Responses on 99 acres were down more than 25% in April-June 2021 compared to the previous quarter. Owner listings also saw a 5% drop as the seller community echoed the uncertain and gloomy sentiment in the market.
Nonetheless, in-home inquiries resumed as the active COVID workload and lockdown restrictions fell in June. 99acres also saw an upward trend in owner lists and responses over the month, followed by a two-month drop. In the following quarters, no upward revisions to lending rates and specific state subsidies on stamp duties and registration fees will help stimulate demand in the residential segment.
India’s real estate industry was caught off guard in April-June 2021 with the start of the devastating second wave of COVID-19. A higher rate of infection and death once again almost brought real estate activity to a standstill. Homebuyers have taken a back seat and avoided site visits altogether, especially in Mumbai, Delhi NCR and Bangalore. Transactions about to be finalized have been put on hold. Overall home sales have fallen more than 55 percent, QoQ. The developers also postponed new launches indefinitely, and ongoing construction activities were halted as migrant workers moved on.
From June, real estate surveys resume. Detached houses or floors with access to terraces have been seen to gain preference. Buyers interested in private companies were willing to increase their budget for an additional room to meet extended work-from-home needs.
The situation does not appear ideal for the residential rental and commercial real estate sector, however, as the reopening of offices has been further delayed. On average, the residential rental market has seen prices fall by around 1% to 3% year-on-year.
Factors that kept the market afloat during the quarter were government initiatives in the form of loan restructuring and tax breaks. Supporting developers to complete their projects on time should also go a long way in maintaining market resilience. However, no price correction in the face of the crisis has been observed so far.
Real estate sentiment experienced a significant slowdown in April-June 2021 due to the advent of the second wave of COVID-19.
Property sales in April-June 2021 were hit hard as buyers temporarily left the market. Metropolitan cities like Delhi NCR, Mumbai, Bangalore and Pune remained the most affected. Overall, home sales are down more than 55% from the previous quarter, when total sales in the eight major metropolitan cities stood at nearly 60,000 units. Level II and III cities also experienced a sharp drop in property sales, which fell from a monthly average of around 14,000 units in January-March 2021 to nearly 6,000 units in April-June 2021.
Homebuyers in the low-income segment, with an annual income of Rs 3-6 lakh, are said to have been hit the hardest by the pandemic. Mortgage disbursements in this category have fallen by around three percent since FY2020. The high income segment (annual income above Rs 18 lakh), on the contrary, has seen a two percent increase in approvals. home loans. These figures persist despite a temporary lull in sales of high-end homes in April-June 2021.
New launches remained gloomy as developers feared a low response rate and faced massive cash constraints. The struggle to even keep up with the construction of ongoing projects was evident from the constant demands raised to extend completion deadlines under the RERA. Hyderabad, Bangalore and Kolkata saw the biggest drop of over 50 percent in new registrations of RERA projects in April-June 2021. Unlike other cities, Kolkata’s real estate market has faced several downsides. growth this quarter, such as the ongoing elections and the cancellation of the West Bengal RERA.
The rental market suffered in all cities with average rates falling 1-3% in Delhi NCR, Mumbai, Bangalore and Chennai. The market is expected to rebound once offices and colleges reopen in a few months.