Undeniably, the real estate market in India after corona outbreak suffered from a significant loss. Most importantly, the global pandemic had a severe effect on the real estate market of India. This is obviously because sales reduced and ongoing projects came to a sudden halt. However, a few towns saw a significant rise in property sales beating the metropolitan cities. To put in simple words, there was an elevation of at least 5% in sales between April and June 2020. Therefore, there are reasons to believe that the real estate market in India 2020 may be on the path of revival. Most importantly, if solutions are implemented perfectly and in a timely manner it could be a saviour .
This blog is especially intended to notify that the real estate sector of India will bounce back quickly. Few bold govt measures will surely lead to the revival.
Real Estate Market of India May Be On Revival Path
- There were transactions of around 1175 units in Noida which beat the transactions in the same quarter last year by around 50 units.
- Without a doubt, there was a significant reduction of sales in April. Subsequently, there were negotiations of 10-15% for sales that closed around May and June. Besides, most of these sales halted from February. Most importantly, these couldn’t be closed because of the COVID-19 outbreak.
- NHB is raising liquidity for Housing Finance Companies
- There is relaxation for External Commercial Borrowings (ECB) funds
- Approval have been given to a Rs. 25,000-crore Alternative Investment Funds (AIF)
Real Estate Market May Be On Revival Path: Pre-existing Government Measures That May Help In The Sector’s Revival
- Industry Status
- Single window clearance
- Removal or multiple taxes
- Incorporation of Stamp Duty
- Lowered interest rates
- Rebate in Income Tax
- Possible reduction in housing loan interest rates
- National Rental income
- Restriction on payable Home Loan Interest
In particular, it is important to understand that the revival of the market will be slow and gradual. Most importantly, it can only happen when there is a resurrection of demand.
Real Estate Market May Be On Revival Path: Reasons
1. Fall of Residential Market
- Economic slowdown
- Liquidity crisis
- Changing investor preferences
2. Growth of Rental Housing
Definitely, the Covid-19 outbreak has put residential property sales to almost a halt. However, it has generated a bigger potential for rental housing. Besides, people across all sectors have found investment in rentals to be more secure and affordable than owning properties. Consequently, this sector has the potential for growth post-COVID as well.
- Most importantly, more people will choose to rent over purchasing. This is because of the financial loss they themselves might be facing.
- The government is putting in incentives to organize affordable rental properties for migrant workers
- There is a large demand among the lower strata of the society for rental accommodation
- Due to existing stocks, the different needs can be catered to
3. Support from Government
- Government has supported through stimulus packages
- RBI has supported by boosting liquidity
- Reduction in repo rates by 40 basis points to 4%
- Reduction of reverse repo rates to 3.35%
- Highest cuts in interest rates
Real Estate Market May Be On Revival Path: Other Factors That Have Contributed
- Extension of loan cessations by 3 months up to August 31, 2020. Subsequently, this will relieve some of the load off the loan takers
- Suspension of interest on working capital loans to be repaid by March 2020. This will relieve the developer, foster investment and increase demand. Moreover, the buyer will benefit from lower EMIs on home loans
- Addition of ‘force majeure’ in contracts. This will extend the construction period by six months and reduce the risk factor for developers
In Conclusion
The real estate sector in India witnessed weak sales for the last few years. Subsequently, there was a sharp drop in its role to the country’s Gross Domestic Product (GDP).We have in short, listed all the reasons to believe that the real estate market will be able to revive. However, despite adequate measures, it will take time for the sector to make a mark on the market. Undeniably, economists are hopeful that the real estate market will soon restore and take off. Most importantly, it holds the potential to bounce back.
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