Demand for residential real estate surpasses pre-Covid levels: Report

After a good festive season, India’s residential market continues its rallying in Q1 2021 with buyer-search volumes moving consistently upwards for both ‘Buy’ and ‘Lease’. The market is expected to gain further momentum given that the country’s GDP has finally started turning positive after an obviously disappointing last year, reveals the latest Magicbricks PropIndex report for Jan-March 2021.

For residential real estate, the change in buyer preferences such as need for additional space, demand for amenities, and the sudden realization of owning a house in troubled times cemented the festive buying demand in Q4 2020 that continued in Q1 2021 as well. Various confidence-building measures by the Central government such as liquidity infusion in stressed projects through the SWAMIH fund and RERA extensions have supported the sector when most needed. In fact, more than 150 projects under SWAMIH have been approved till now and the delivery of undertaken projects is expected to start from 2021 itself.

“Reduced home loan interest rates have further made home buying an attractive proposition in the country. Additionally, stamp duty reduction in some states has given pace to transaction volume, giving a push to end-user led demand, which in turn has led the developers to launch new projects across the country. After the festive season euphoria, we saw rationalisation of the surge in traffic volumes in some cities in Q1 2021. However, it is interesting to note that demand is still way above the pre-COVID levels and cities such as Ahmedabad and Greater Noida recorded 7 and 13% growth in traffic, respectively,” said Sudhir Pai, CEO, Magicbricks.

Thus, a host of factors like reduced home loan interest rates, reduction in stamp duty, and discounts and deals offered by developers have made home buying an attractive proposition in the country. This has also led the developers to launch new projects across the country and Hyderabad led the way with a significant 20% rise in supply.

Pai said, “The first quarter of the year 2021 has indicated a strong revival in the economy. The Indian economy is expected to grow by 10-13% in FY 22 as per predictions by various multilateral agencies. After the festive season euphoria, we saw rationalisation of the surge in traffic volumes in some cities in Q1 2021. From the price perspective, the southern region witnessed the most price increments in Q1 2021 in both under-construction and ready-to-move segments. We foresee the momentum gained in the last six months to continue across both supply and demand, backed by new launches tailored to the emergent needs of consumers and all-time low interest rates.”

Key takeaways from Magicbricks’ Propindex Report Q1:

Bengaluru: Under-construction properties have been driving price growth in Bengaluru. New launches in Bengaluru have gained pace, resulting in a residential supply increase of 6.9% in the first quarter of 2021, which is in line with the pan-India. The majority of Bengaluru’s new supply was concentrated in the city’s eastern and southern outskirts.

Chennai: Demand in affordable neighborhoods is driving the Chennai residential market. In Q1 (Jan-March) 2021, the supply of new housing units in Chennai increased marginally by 3.8% QoQ, as developers resumed work on projects that had been put on hold since the lockdown began. With search volumes on Magicbricks mostly maintaining its heightened levels, both under-construction and ready-to-move-in segments witnessed a price growth of 1.7% and 1.2% QoQ, respectively.

Hyderabad: Increased activities in the under-construction segment is leading recovery in Hyderabad. The city’s residential real estate market has recovered its pace with an increase in the supply of new housing units across the city due to resumption in construction and the proactive measures taken by the developers and government. The supply in Q1 2021 was up by 19.5% which was more than twice the supply growth in India.

Mumbai: Tax sops and lowered prices are upholding the positive market sentiment in Mumbai. The city witnessed a supply boost in the form of new housing units, resulting in a 10% QoQ increase in overall listings in Q1 2021. Developers have started launching projects which were on hold since the onset of the lockdown last year amidst a strained funding environment, and unavailability of resources.

Ahmedabad: Affordable and mid-segment buying have triggered steady growth in Ahmedabad’s real estate market. The city has capitalised on the momentum it achieved in Q4 (Oct-Dec) 2020, and continued to perform well in Q1 (Jan-March) 2021, showing an upward trend for all the three performance indicators, i.e. residential demand, supply, and price. Ahmedabad’s demand for residential properties in Q1 2021 gathered pace, moving up by nearly 7%, while supply also grew by nearly 3%, indicating an improvement in new launches, especially around the peripheral areas.