The sharp rise in new Coronavirus cases in India in 2021 could harm demand for residential real estate in the country, which was just beginning to recover.
The affordability of housing is improving
The positive impacts of the inoculation program will also be seen in the real estate segments of the country as India continues with its Coronavirus vaccination drive. Despite the continuing effect of the Coronavirus pandemic on the market, India’s residential real estate sector is likely to see better sales and supply in the January-March timeframe of 2021, if improving housing affordability is any indication.
The new housing offerings in 2021 would continue to be affordable housing in gurgaon and mid-size, with the development industry trying to reap the benefits from strong pent-up demand. In a report titled “India Real Estate Outlook – A New Growth Cycle,” property broker JLL India also indicated.
With many rating agencies revised upward in India’s growth projection, the recovery can also be better and earlier than expected for the country’s housing sector.
The first reaction to COVID from the Indian housing market
Following a 23.9 percent fall on the previous fiscal quarter, global S&P, Moody’s, and Fitch rating agencies, respectively, foreseen an 11.5% and 10.5% decline in the Indian economy in the current fiscal period, after the gross domestic product (GDP) figures for the first quarter of FY21.
S&P Global Ratings on 14 September 2020, with a record number of infections in the country, cut its forecast of FY21 growth for India to 9% compared to -5%. “The continued escalation of the COVID-19 is a factor that retains private economic activity,” said Vishrut Rana of the S&P Asia-Pacific global rating economist.
The long-term lock-up, starting from 25 March 2020 and eventually extending until 7 June 2020, in India, with the long road towards recovery delayed, has made the situation of Asia’s third-largest economy worsening with a sharp rise in the number of infections.
Research agencies forecast a short-term stop to property growth in India. In the period from July-September 2020, the PropTiger.com data show that house sales in India’s 8 largest cities decreased by 66 percent.
Impact of COVID in India on home buyers
If lowinterest rates (now below 7 percent household loan rates) and a high tax exemption are to change consumption behavior, the outbreak in Coronavirus will probably stop this shift, at least in the near and medium-term.
This could lead to a postponement of purchase decisions with property seekers who cannot or do not want to visit the site. With the pandemic coronavirus affecting everyone, the problems have aggravated India’s real estate sector, which, since the economic and political reforms were introduced, has faced a ‘difficult scenario.’ The downturn from the end of February is apparent and while there are nearly no site visits, the process of decision-making is extremely delayed.
It would also force many forward-looking buyers to wait for clarity regarding their workplace security, before making a final decision on the purchasing of property.
The pandemic has, however, led buyers to realize the value of homeownership, thereby increasing residential property’s sold sentiment.
COVID impact analysis in India on real estate prices
In India, after trade and industry union minister Piyush Goyal on June 3, 2020, the developer community said builders needed to sell housing projects at a low price and drop high-priced unsold stock. The developers had a tizzy attitude. Is it going to drop prices?
If the slowdown of demand has kept the price growth of India’s residential immobilization market under control it will eradicate a coronavirus pandemic that threatens to have a dramatic impact on global economic development. Shortly, it would be only wishful thinking to wait for price appreciation.
From Thursday, in some excellent places of the city, the government of Gurgaon decided to increase the circular rate by up to 90 percent. Circle rates, for example, were raised from Rs 20,000 per sq ft to Rs 25,000 per ft sq., at DLF Camellias, Magnolias, and Aralias, one of the country’s most costly condominiums.
The decision by the authorities in Gurgaon to raise the rate by up to 90% will have an impact on the immobilization industry and hurt the recovery process.
In some of the most important places in the city, the government of Gurgaon decided to increase the circle rates by 90%.