As housing real estate sales recover towards pre-COVID levels, the trigger for renewed demand points to the changing mindset of the Indian working-class population in major cities. A large chunk of homebuyers in metro cities think about the need for a bigger space and amenities around after the lockdowns and the continuing social restrictions. Besides, a large section of people who live in rented houses are actively looking to own houses which also helps in demand recovery.
Niranjan Hiranandani, founder and managing director, Hiranandani Group, told Business Today that a large section of homebuyers in metro cities are helping the revival of sales. "Families in tier-1 and metro cities have opted to move to larger homes in locations with open spaces and amenities as per the new normal. 'Work from Home' has translated into many who were working in metro and tier 1 cities and staying in rented premises in those locations opting to buy their own homes," Hiranandani said.
The enquiries of home buyers are almost back to pre-COVID-19 levels. The process of conversion of enquiries into actual sales is taking longer than what used to be in the pre-pandemic days. However, it's getting closer to normal as positive news about coronavirus vaccine has brought in positivity.
According to a recent report by ICRA, the improvement was primarily driven by gradual unlocking of the economy, pent-up demand and improved affordability on the back of reduced home loan rates and attractive payment schemes or discounts. Following a severe decline in April-June quarter, the housing segment has witnessed a sharp recovery in July-September quarter. Sales across the major eight cities rebounded, indicating some green shoots of normalisation.
"Residential real estate buyers are the ones who realise the need for a new home, and these come from across income groups as well as segments like the private sector or government jobs. The lockdown saw a number of enquiries and sales drop; 'Mission Restart' has resulted in both - enquiries as also sales - registering an increase. It's across segments and employment categories," said Hiranandani.
He expects bullish demand even after the festive season. "In the pre-COVID world also, we used to see high demand and sales during the festive season, with numbers tapering off as we enter the new year... but sales will not stop," Hiranandani said, adding that the economic recovery will boost buyer sentiment and sales will continue to grow.
The affordable and mid/upper-mid segments drove the uptick in absorption. Demand from first-time home buyers has also increased for 1BHKs. The returning NRIs are also looking for large-sized living spaces.
In the second quarter, home sales volume bounced back considerably with quarter-on-quarter growth of 60 per cent. However, overall sales volume declined 50 per cent in the first half of this financial year across the top eight cities in the country, according to ICRA.
Hiranandani said the government and industry bodies are jointly trying to resolve debt problems of real estate companies. "It is a challenging situation, something that began with the Tsunamis of reforms - economic, taxation and industry; worsened as the cash crunch challenges grew in the aftermath of the NBFC problems and reached a new high with last-mile funding issues. COVID-19 enhanced the challenges, industry bodies like NAREDCO are working in partnership with authorities to sort out these challenges. The K V Kamath Committee recommendations to the RBI on the restructuring of debt as well as the SWAMIH scheme have created a positive outlook," said Hiranandani, who is also the President (Nation) of NAREDCO and Assocham.
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