The real estate sector, just like every other sector, has been impacted by Covid-19 and the accompanying lockdowns. However, the trends are not what you would expect, especially in the mid-range and luxury property sectors. Homes costing less than ₹50 lakh made up 42% of all sales from January till June. Despite the 2nd and possibly 3rd wave of the pandemic, sales increased by 67%, to 99,416 units in the residential property market, compared to the same time period in 2020. Launches of new real estate projects also increased by 71%, to 103,238 developments, as stated by various reports.
Although the 2nd wave of the pandemic led to more curfews and lockdowns, the 1st half of 2021 saw a 185% increase in property sales from the same time last year. The markets that soared the most during the 1st half of the year were Mumbai and Pune, which combined, constituted more than 45% of the total sales among key markets. This was due to the Maharashtra Government’s plan to lower rates of stamp duty till the dust settled. The momentum soared during till the 2nd wave put a slight dampener on progress in late March. The timing of the 2nd wave mimicked that of the 1st but unlike 2020, the real estate market didn’t get impacted nearly as much. Unsold inventory also reduced by 1% with prices reducing by a consistent 1-2%. Homes worth more than ₹1 crore made up 19% of all sales.
Due to the 2nd wave, things slowed down slightly in Q2, especially in the sub ₹50 lakh segment which can be attributed to people in that demographic not having the confidence to purchase new properties due to fincancial uncertainty and fluctuating prices. Q2 also accounted for less than a quarter of all the project launches in the first half of 2021. It was still a significant increase over the same time period in 2020.
In the latter half of 2020, the resuming of economic activity and availability of vaccines increased demand and this trend continued in 2021. Market leaders are calling the slight loss in traction caused by the 2nd wave as nothing more than a speed on the path to recovery. The surge in demand for real estate in 2021 curbed the price drops that were experienced last year. Prices still remain low and developers are trying to offer flexible payment schemes to attract investors. Almost 2 years of living under restricted conditions have made buyers re-consider their choices and opt for what would be the best decision for them in the long run and sellers & developers are trying to accommodate this by making changes. Looking at the positive results of the 1st half of 2021 and the reduced damage causes by the 2nd wave, it seems as though the market has sorted itself out with help from various government policies.
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