Industry experts feel that this is the right time to buy a house because buyers are likely to get better deals and prices may go up in the near future.
The COVID-19 crisis has dealt a major blow to the real estate sector. The home buying cycle has been massively impacted, and transactions continue to remain low. This has, however, not impacted the prospective buyers’ sentiment much. According to a recent survey by 99acres, close to 60% of the Indian homebuyers who were looking for buying a house before the pandemic are still planning to buy their homes within a year. However, 40% of the buyers have postponed their plans. The major contributor to delaying the purchase decision is uncertainty in the market (52%), followed by financial reasons (30%).
Real estate demand & supply mechanics
On one hand, industry experts foresee prospective demand for the residential properties and on the other hand, homebuyers seem hesitant to lock deals over virtual site tours and give a rain check on their purchase decisions. Nevertheless, the recent survey by 99acres revealed that (31%) respondents still believe real estate the best option to invest, followed by fixed deposit (24%), gold (24%), and stock market (21%).
Commenting on the same, Siva Krishnan, Managing Director – Residential Services at JLL India, said activity levels in Bangalore are much better than any other city.
He said, “Cities that have IT/ITeS or pharma clusters are indeed showing marked improvement in terms of demand for housing. As far as the enquiries are concerned, interestingly, they have gone up and the virtual site visits have come down to an extent. People are more than willing to come and visit the sites. Simultaneously, the conversion rate from site visits has gone up. The customers are actually calling up and enquiring about properties. Things are warming up better than anticipated.”
Developers believe that the COVID-19 crisis has paved the way for new opportunities and business trends.
Rohit Gera, MD, Gera Developments, said, “Online enquiries have grown as people want to narrow down their choices to only a handful of projects for actual site visits.”
Since site visits are still an inevitable step, therefore, developers are ensuring safety for the buyers at the site and are encouraging buyers for a site visit.
Gera said, “We are also encouraging people for site visits so that they get the exact look and feel of the property. We have disinfected our sites and have installed proper cleaning systems to ensure the safety and well-being of our clients. We have a ‘free look period’ of seven days where customers can visit the property, look at it, and if they want to cancel the deal, they can do so without any question asked and loss of pay. This has helped us build trust among the buyers that they will get their money back in case they dislike the property during the site visits.”
Property Prices & Projections
Developers do not foresee any major cut in property prices in the post-Covid world, which was also highlighted at a Realty Buzz webinar conducted by 99acres
Mohit Goel, CEO, Omaxe Ltd, said, “There are primarily two questions which have been raised during the COVID-19 crisis – why should I buy now, and would property rates fall? Apart from homebuyers asking these questions, demand has more or less remained the same as at the pre-COVID-19 times. So, I would say, none of the brands who have been able to continue their construction work during the crisis would slash prices. I would advise homebuyers to be careful if any developer is willing to cut prices by 15-20 per cent.”
Industry experts also believe that there is hardly any room for reduction in property prices. While sales have been low in the recent past, the market has not been great. Moreover, policy reforms, such as RERA, GST and demonetisation have impacted the market to a great extent.
Krishnan said, “The outbreak of COVID-19 is yet another major blow to the industry. If you take into consideration the rate of inflation over the years, the prices have actually gone down. The developers are already working at low margins. Despite all odds, they have still been providing 7-8 per cent price cuts in order to facilitate cash flows.”
Timing to Invest Matters
Industry experts feel that this is the right time to buy a house because buyers are likely to get better deals and prices may go up in the near future.
Goel said, “It definitely is a great time to buy since we are sitting at home loan interest rates which are at an all-time low. While a price correction is highly unlikely, especially with branded developers, it would be a good time to grab a good deal in the loan market.”
In the survey of 99acres, homebuyers showed a strong affinity towards ready-to-move-in properties. 85% of buyers believed ready- to-move homes are safer than an under-construction property.
“This is the best time to buy a property, especially for end-users. While the interest rate for the housing loan has gone down, the affordability has increased over the years. Moreover, the prices have not increased much from the last 6-7 years. As anticipated, the prices might go up in the ensuing months due to an increase in the sales velocity,” said Krishnan
