Demand for housing back at March levels: Reports

Residential property rates during April-June in most Indian cities increased to the March level despite a deadly second wave of Covid-19 pandemic crippling the economy in April-May, two reports have said. The latest Magicbricks PropIndex has revealed a pan-India price growth of 1.7% in residential real estate during the quarter, with signs of demand recovery visible in June. Another quarterly report by real estate advisor PropTiger.com has shown that seven cities among India’s eight prime residential markets recorded a growth of 2-5% during the quarter ended June on a year-on-year (y-o-y) basis.

June magic

All thanks to coronavirus cases subsiding in June, the demand for housing rebounded to the March levels, even as April and May witnessed a slump, as per Magicbricks.

Intermittent lockdowns across states due to the second wave and continuance of Work from Home (WFH) in most sectors ensured a rise in demand for apartments having three or more bedrooms to suit the requirement of home office.

According to PropTiger’s quarterly report, Ahmedabad and Hyderabad markets recorded the highest growth of 5% during the quarter on a year-on-year basis.

The average price of housing property in Ahmedabad as on June 30, 2021, was Rs 3,251 per sq ft, while it was Rs 5,790 per sq ft in Hyderabad, as per the quarterly analysis, Real Insight (Residential) – April-June (Q2CY2021).

The national growth was 3% y-o-y, with an average rate of Rs 6,234 per sq ft as of June 30.

Barring Mumbai, all cities recorded 2-5% growth in the sector. In the city, the home property rate remained same at Rs 9,475 per sq. ft.

Supply-side down

On the other hand, supply was less as liquidity-starved developers showed caution in launching new projects during the time, despite banks maintaining a record low home loan interest rate. At the present rates, one can get a home loan at annual interest rates starting at 6.65%. The Reserve Bank of India continues to maintain the status quo on repo rate at 4% and reverse repo rate at 3.35%.

According to the PropTiger report, 21,839 new units were launched in the eight markets during Q2CY21, showing a decline of 59%, as compared to the January-March period.

During the April-June quarter, both demand and supply were hit in the first two months. However, some ground was covered during June when states started to open up. We expect improvement in residential real estate health in the upcoming quarters with India’s vaccination programme likely to gather pace,” said Dhruv Agarwala, group CEO, PropTiger.com.

He added that the newly passed Model Tenancy Act is expected to give a fillip to the rental housing supply.

March boom

In the January-March quarter, a 20% year-on-year hike in sales of housing units was recorded, according to a 99acres.com report. Delhi-NCR, Mumbai and Pune showed consistent growth, the report said.

Mumbai even witnessed a resurgence in sales amid a stamp duty cut till March. Mumbai, along with Delhi even topped the chart for luxury housing property priced more than Rs 1 crore, followed by Bengaluru and Hyderabad.

Residential property sales across the top eight cities neared 85 million sq. ft in the March quarter, rating agency Icra had confirmed.

Earlier, addressing the One World One Realty Global PropTech Summit 2021, HDFC Chairman Deepak Parekh had said the housing demand, not pent-up, was here to stay.