However, this period will also be known for providing the much-needed turnaround for housing in terms of sales growth and return of homebuyers to the market led by price correction, incentives offered by developers and tax benefits from the government.
Although residential real estate bottomed out in 2020 against the previous peak of 2014, the October-December quarter has provided strong revival signs with home affordability being at its all-time best.
“Shelter is a basic need; and once again has gained prominence in the wake of a pandemic crisis. The demand for residential real estate will always be there with dips in the curve. The unprecedented Covid-19 pandemic induced total lockdown impacted global economies and Indian real estate stood no exception. As the ‘Mission Unlock’ spanned out economic activities resumed gradually and an uptick was witnessed with fiscal impetus,” said Niranjan Hiranandani, national president, NAREDCO.
The combination of record low home loan rates, deal sweetener and flexible devised payment schemes for ease of payments were real triggers for augmented sales momentum apart from stamp duty reduction by states including Maharashtra, Karnataka and Madhya Pradesh.
Top seven property markets across the country have seen total home sales of over 1.38 lakh units in 2020, on-year decline of 47%. However, amidst varied offers and discounts, these top 7 cities saw robust sales of around 50,900 units in the fourth quarter, rebounding to 86% of the activity seen in the corresponding period in 2019, showed data from Anarock Property Consultants.
“Covid-19 caused an all-round upheaval. However, the residential segment was quick to pick up momentum in the last two quarters of 2020 on the back of growing homeownership sentiment catalysed by the exigencies of the pandemic. This pent-up demand was further accelerated by the ongoing discounts and offers, the prevailing lowest-best home loan interest rates and limited-period stamp duty cuts in states such as Maharashtra,” said Anarock’s Chairman Anuj Puri.
Mumbai Metropolitan Region (MMR) and Pune drove residential sales, with these two cities accounting for over 53% total share of sales.
The country’s biggest real estate market of Mumbai has continued its record-setting ride in December as homebuyers rush to conclude deals to take advantage of these factors that have converted the market in buyers’ favour. The performance in December has already broken all the monthly records in just the first half of the month and is expected to close with the highest numbers ever.
In a major boost to the residential real estate sector, in November, the government announced tax relief to both homebuyers and realty developers by increasing the differential between ready reckoner or circle rates and market value for tax exemption to 20% from earlier threshold of 10%. This was made applicable on primary sale of residential properties valued up to Rs 2 crore until June 30, 2021.
“This was a practical move that is allowing developers to offload stuck inventory without worrying about tax implications as prices of residential properties in many micro-markets have gone below circle rates,” said Jaxay Shah, national chairman, Confederation of Real Estate Developers' Associations of India (CREDAI).
The renewed consumer demand in backdrop of favourable market conditions and the need to own a home on grounds of safety, security and stability is expected to fuel the sustainable demand for year 2021.
In the upcoming Union Budget, according to both Hiranandani and Shah, real estate is looking for measures that would ensure liquidity, access to funds and longer repayment cycles that would help augment supply and achieve the government’s stated objective of ‘Housing for All by 2022’.
From homebuyers’ perspective, cheaper home loans, tax benefits on investments in housing would help in propping up demand. Reforms in taxation related to affordable housing, joint development and measures to promote foreign investment are also being awaited.
The sector is also eyeing relief with steps like one-time restructuring of loans, more funds like SWAMIH for the sector to help meet the target of last mile funding for stressed projects and bringing the risk weightage of loans to developers at par with other industries.
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1 Comment on this Story
Praker 49 days ago
FM should ensure that real estate price are getting collapsed.. stop all tax soaps to housing loans.. make sure all property transactions are via banks.. link property with Aadhar.. property tax and stamp duty should be included in GST. Abolish circle rates and guidance value.