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If you are looking to buy a property in Pune and wondering whether the COVID-19 pandemic has impacted prices or real estate investment in any way, the answer is encouraging. As per the Gera Pune Residential Realty Report, it looks like the best time to buy a home in the city. Not just this, against popular opinion, if you thought that the luxury market is on shaky ground, this is not entirely true either.
Affordability in Pune
In 2020, the average per sq ft value of property prices in Pune stands at Rs 6,573. The average rental in the city is Rs 19,880 per month, as per listings on Housing.com. “The latest reduction in interest rates, has led to increased affordability, which is now at 3.79 times one’s annual income (it was 3.91 times at the same time in 2019), making this is the best time to buy a home,” notes the Gera report. Home loan rates are as low as 6.70% from some public banks.
See also: Cost of living in Pune
Inventory in the Pune market
While real estate may have suffered a setback due to the Coronavirus spread, it is likely to be temporary. Developers, channel partners and other stakeholders, have adopted new and innovative ways to keep in touch with interested buyers or even those who are contemplating a purchase. The report too suggests that inventory is at a five-year low, as new launches have decreased by 60%.
As per data with Housing.com, there are close to 50,000 properties for sale in Pune, a majority of which is in the secondary market. While COVID-19 may have affected launches, the trend towards rationalisation in new launches, can be mapped back to the real estate law, following which builders focused on completing existing projects, rather than launching new ones. The Real Estate Regulatory Authority (RERA) mandates stringent action against developers who flout rules.
“New launches have seen a significant decrease, falling by 60% from 52,631 new units introduced into the market in H2 2019 to 21,072 new units introduced in H1 2020. On an annual basis, new inventory launched across the city has fallen by 16%, except in higher priced neighbourhoods,” notes the Gera report.
A good time for the luxury housing segment in Pune
While new launches may have gone down, the reality in the luxury segment looks different. New launches in this segment have grown by 71%, says the report. While launches in other segments have remained the same or seen a decline, according to the Gera report, there were 5,050 new luxury project launches in the city between June 2019 and the same time in 2020. Boat Club Road, Model Colony, Senapati Bapat Road, Erandwane and Sopan Baug are among the premium residential areas.
See also: Posh areas in Pune
Hiral Sheth, HOD – Marketing, Sheth Creators that caters to luxury and ultra-luxury homebuyers says that with the COVID-19 pandemic, real estate unarguably became the most suitable investment product.
“The upward curve of the segment sets off in Q2FY21 and this has been consistently growing, breaking the jinx of all these years. In fact, all through the nationwide lockdown implemented, realty transactions continued to happen virtually. This positive development can be attributed to reasons like the RBI pumping liquidity in the segment, increased significance of homeownership among the buyers, deferred payment scheme in favour of RTMI properties and the sales incurred during the festive season. The home buyer’s comprehension that capitalizing in real estate is the most secure long-term investment in a fluctuated market has also created a strong base for the sector to grow,” notes Sheth.
Strategic steps taken to boost property sales
Some of the biggest catalysts for real estate sales, Sheth says, has been the stamp duty cut, slashing of repo rates and an all-time low-interest rates on home loans.
Stamp duty cuts to mobilise fence-sitting homebuyers
It is no secret that many potential home buyers are fence-sitters owing to the huge financial obligation involved in property buying. In addition to paying the down payment and availing of home loans where one would be paying an EMI every month, fringe charges like registration charges, stamp duty charges, etc. hurt home buyers by shaking up their entire budget, especially now when the entire world is battling a pandemic. Any respite in these charges is a big relief and gives a push of confidence to the customer.
Aptly understood by the Maharashtra government, stamp duty reduction from 5 per cent to 2 per cent in this state has been a game-changer. The same will become 3 per cent from January 1, 2021 to March 31, 2021. The results of this slash were to be seen immediately with Mumbai recording registrations that increased significantly. Similarly, Pune’s property market has been witnessing healthy green shoots which has brightened the hope for better real estate sales for the upcoming quarters. Pune has now recorded a significant jump in sales when compared to the previous quarter.
Low-interest rates on home loans
In Sheth’s opinion, global exposure has resulted in people taking realty investments seriously for both self-consumption and as an asset. This has also led to more people between the 25 to 35 years of age because they can leverage on the home loan financing option. However, the rate of interest on home loans was a huge matter of concern for home buyers that is tackled now. Interest rates have come down by a 15-year low currently, making it one of the most lucrative times to borrow a home loan. After the RBI reduced the repo rate to 4 percent, most leading banks in India offer home loans below 7 percent annual interest. Resultantly, more and more home enquiry leads translated to sales.
Additionally, developers are offering bespoke payment schemes like 10:90, 20:80 etc., waiver of stamp duty/registration charges/ GST (8 percent of the property cost have to be paid as GST on under-construction properties) and cash-back schemes that are reducing the significant financial burden of home buyers.
Better product quality for home buyers
Between July 2017 and June 2018, it took 45 projects to sell 10,000 units. The Coronavirus pandemic seems to have accelerated consolidation in the industry. The report suggests that thoroughly professional builders, with strong financial health, emerged stronger. This also led to providing better returns for consumers, both, in terms of service and product quality.
In one of the webinars organised by PropTiger, Jitendra Singh, VP, sales and marketing at the Runwal Group, said, “For the success of any project, three things are important: first is the brand/developer, second is the location and third is the product.” Developers need to create products that are not only superior in terms of internal and external design and amenities, but also offer the units at the best possible cost. “We have launched our project at a price below the usual range and have also given a payment holiday till March 31, after the initial 10% payment,” says Singh. With such offers, a number of reputed developers in Pune are trying to make it easier for prospective home buyers to consider these brands.
Housing.com initiatives
Similarly, real estate portals have also announced several measures to make real estate transactions easy, following the COVID-19 crisis. Housing.com, the largest real estate listings and advice platform, for example, introduced a number of innovative measures for buyers and sellers, while the world was in a lockdown:
- Video connect: Connect in real-time with buyers and sellers.
- Rewarding experiences: Pay rent through your debit or credit cards and even use UPI to transfer the rent to the house owner. So far, Housing.com has enabled the transfer of Rs 100 crores worth of rent.
- Housing in Hindi: To help more buyers, Housing.com is now available in Hindi.
- WhatsApp Connect: Housing.com has enabled WhatsApp connect between brokers, sellers and buyers.
- Self-reliant: To ensure that sellers make the most of their time, all promotional and ad packages have been made self-serve with zero manual intervention.
FAQ
Is it safe to buy a property in Pune now?
Home affordability is at its best, making it one of the best times to buy property in Pune. There are fewer launches but developers are focusing on sales and product quality.
Have property prices risen in Pune in 2020?
Yes, research shows that there is an increase in the average market prices across Pune. However, the average price went up on account of new projects being launched at more prime locations than before and not due to any change in market sentiments.
How are real estate developers tackling COVID-19 impact on their construction?
Definitely, stress for developers has increased with salaries and most overheads continuing to deplete their cash flows through the lockdown. Moratoriums on repayment of debt have merely deferred payments to financial institutions, while the interest burden has continued to add to the liabilities of developers through the period of zero activity. At such a juncture, defaults may be rampant, if the financial footing of the developer is not strong. At this juncture, better interest rates to home buyers, may improve sales.
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