Mumbai: Notwithstanding the uncertainty in India’s economy due to the impact of COVID-19, the real estate industry has witnessed a growth recovery in demand as property searches increased by 30-40% as compared to pre-Covid levels with consumer preference predominantly shifting towards affordable and mid-segment properties, reveals Magicbricks’ latest PropIndex for the quarter of July-September (Q3) 2020.
The previous edition of the Propindex Report for Apr-Jun (Q2) 2020 had reported that the consumer searches reached pre-COVID levels in June, after falling by as much as 50% during April. The consumer search pattern holds the same trend since then and as of Sep 2020, the consumer searches were almost 30-40% higher than the pre-COVID levels.
Commenting on the PropIndex report, Sudhir Pai, CEO, Magicbricks, said, “The next 6-8 months are crucial for the revival of the residential sector. The onset of the pandemic and the ensuing lockdown have changed consumer preferences. Today, the shift is towards affordability as home buyers have reduced their budget but they haven’t changed their preference in terms of BHK or size. With the festive season just around the corner, we are witnessing a sharp recovery in demand and prices have remained stable for the July-September quarter after falling up to 5% in the April-June quarter of 2020. This augurs well for the industry and we hope consumers’ buying sentiment will continue to improve and translate into transactions in the coming quarters.”
The PropIndex report suggests that primary concerns of liquidity crunch and subdued levels of transactions have become acute during the pandemic, but the lockdown has also thrown open a plethora of opportunities and interesting buyer trends. In line with the overall economic sentiment, the consumers have reduced their budgets in most cities but they are not compromising on the size of the house and moving towards peripheral locations. This trend is an indication of working professionals’ newly emerging need for additional rooms in homes with the altered lifestyle of having to work-from-home. However, it is too early to say, if such trends would sustain in the long-term and how developers leverage the changing buyer preferences.
On a regional level, the southern market of Hyderabad has slightly recovered posting a 2% price increment in Q3 2020 after witnessing a dip of 5.2% in Q2. The real estate prices of the Mumbai Metropolitan Region (MMR) marginally improved in the quarter. The NCR region including Gurugram and Noida posted a marginal increase in prices as well.
Measures taken up by the government such as the extension of RERA deadlines, reduction in stamp duty, and liquidity infusion in stressed projects through the SWAMIH fund (more than 100 projects approved till now) are expected to boost the confidence of home buyers and also help developers. Resurgent demand and stable prices indicate that for now, the residential sector has managed to stay off the panic mode, and with an expected early arrival of the vaccine for COVID-19, it should let the sector take its normal trajectory.
Key takeaways from Magicbricks’ Propindex Report Q3.:
- Bengaluru is on the path to recovery, searches for property grew by 47% in Q3 after witnessing a fall of 14% in Q2 owing to the lockdown. The price decline was recorded to be only 0.5% in Q3 2020 post the un-lockdown process. Focus shifts to affordable neighborhoods in the periphery, even as mid-segment continues to drive maximum traction for home buyers.
- Chennai depicts a modest recovery, with a greater focus on affordable housing, property searches increased by 35% in the region. Magicbricks data suggests that ready-to-move properties witnessed a marginal dip in prices of 0.6% QoQ and 0.3% YoY.
- In Hyderabad, the independent houses and plots market fully recovered in search volumes as compared to pre-Covid levels. Prices in the residential market that previously witnessed a 5.2% decline in Q2 2020, now observed a 1.9% QoQ increase in Q3.
- In Delhi, property demand witnessed a turnaround with more searches near the employment hubs. The city witnessed an increment of 36% in the searches in Q3, as compared to an 11% QoQ decline in Q2 2020. While the demand increased for residential properties, prices fell 0.5% in Q3 2020.
- In Ahmedabad, a significant rise in residential demand was recorded as property searches grew by 144% after witnessing a fall of 51 % in Q2 2020. While buyers and developers adapted to the ‘new normal’, the quarter also noticed a slight improvement in supply. Prices slightly moved up by 0.6% QoQ, with affordable localities largely contributing to the rise.
However, it will be interesting to see the new trends emerging in the markets. With affordable housing segments and ready-to-move properties as the key focus for buyers, peripheral regions near employment hubs are picking up pace.