Residential real estate demand rebounds: Magicbricks PropIndex report
Despite the fall in April and May, housing demand in June’21 rebounded to the level of March’21.
The intermittent lockdown due to Wave 2 and the continuation of work at home (WFH) policies have ensured an increase in demand of 3BHK and above as homebuyers look to modernize to need an additional room for meet the needs of the home-Office.
This shift led to increased demand share of 3BHK and higher configurations in Delhi-NCR, Hyderabad and Kolkata, reaching a record high of over 65% of aggregate demand share in all of these markets. .
Commenting on the PropIndex report, Sudhir Pai, CEO of Magicbricks, said, “Unlike the first wave, the recovery in residential real estate demand was faster in the second wave. The residential markets of Bengaluru, Chennai, Thane, Noida-Greater Noida, Kolkata and Delhi saw price corrections ranging from 1% to 2.3% during the quarter, which also led to an increase in medical and health spending. the debt. This rise in prices reflects the inherent strength of the housing industry, even in these troubled times. The quarter also saw an increase in supply across India of nearly 8% due to new launches, with Hyderabad recording a peak jump of 20%. This recovery can be attributed to factors such as constant demand in large properties and a higher inflow of global PE funds secured by good risk-adjusted returns by the sector. This rapid recovery signals a resurgence of stability in the industry.
The maximum impact of the crisis has been observed for middle and lower income buyers who are generally looking for smaller homes with lower configurations. However, most high-end and high-income buyers have been relatively less affected by the crisis in terms of money flow. This trend resulted in lower configuration demand, while demand for larger homes persisted in the second quarter of 2021.
Key points of the report:
Delhi: The residential real estate market in Delhi experienced a 2% quarter-on-quarter price growth in the second quarter of 2021. The price growth is mainly driven by higher prices for projects under construction, which increased 10.8% year-on-year. However, the prices of ready-to-move-in property have remained stable over the same period. A major factor contributing to this trend has been the shift in sourcing patterns and buyer preferences for higher end and larger units.
Bangalore: A demand drop of more than 25% during the second quarter of 2021 has been observed. However, property prices continued to show a resilient outlook as they rose slightly above 1% over the same period. The state government began helping property taxpayers during the lockdown by extending a 5% property tax refund until June 30 in the city.
Chennai: Demand for residential housing fell 17.9% in the quarter ended June 2021, compared to -3.7% in the first quarter. Housing prices in the city and its suburbs, however, rose 1.5% despite containment and business closures.
Hyderabad: The city’s residential market has seen an increase in the launch of new projects, leading to an upward revision in property prices in segments under construction and ready to relocate. The rise in the price of real estate has been the result of a shift in demand towards larger housing units with better social infrastructure and recreational facilities as well as an increase in construction costs.
Mumbai: Mumbai’s real estate market has also faced headwinds, seeing some contraction in residential demand. However, with various supportive measures taken by the developers including easy and affordable payment plans, the extension of the 2% stamp duty benefit and various gifts and offers, among others, helped to limit this decline. of demand at only 16% QoQ compared to the national level. demand drop of more than 23% QoQ.
Pune: Despite the ongoing crises and the downturn in the property and infrastructure sector, residential property prices in Pune registered marginal QoQ growth of 0.7% in the quarter ended June 2021.
The PropIndex also suggests that the momentum gained over the past six months will continue on both supply and demand, particularly given emerging consumer needs for larger homes and historically high interest rates. low. However, caution is required given the resurgence of Covid cases in the country and threats of a new round of blockages. The future of the sector is linked to the speed of vaccination campaigns and the completion of infrastructure projects such as the metro and major highway projects.