Housing Rates Unlikely to Fall Despite Lower Demand
After a significant correction last year, housing prices are likely to remain stable, or even witness a moderate hike in the coming months, despite a dip in demand due to the second Covid-19 wave. “The sale of housing units rose across top cities in India in the first quarter of 2021 to nearly 1 lakh versus 87,000 in Quarter 1 of 2020. The continued increase in sales indicates that demand and customer confidence has returned to the market due to low home loan interest rates and higher affinity towards bigger homes,” said Amarjit Bakshi, CMD of realty firm Central Park.
He added that it is highly likely that, for a short span of time, developers will follow the strategy of sticking to reduced profit margins. But prices will tend to tick upwards as the market gains momentum. Vikas Garg, Deputy Managing Director of Gurugram based MRG World, a conglomerate that specialises in affordable housing gurgaon, said that the impact of the second wave has been mild.
“Some markets have witnessed a minimal increase ranging between 1-3 per cent. Prices are already subdued and as raw material costs are high, making it difficult for the realtors to consider price correction,” he said. After housing sales fell around 90 per cent in Q2 of CY20, many developers started offering discounts of up to 10 per cent. Besides this, lower interest rate and a reduction in stamp duty and circle rates also lifted market sentiment.
However, the second Covid-19 wave has broken the momentum. Sanjeev Arora, Director at property consultant firm 360 Realtors, said that on an average, there has been an increase in prices by 3 per cent in Q12021 against the previous quarter. “In the coming months, the prices are expected to be relatively range-bound,” he said.