The ongoing second wave in India and the localized lockdown have affected home sales in India, although the fall is not as steep as the one last year when a two-month-long countrywide lockdown had crippled the country’s real estate sector.
A report by real estate consultant Anarock has found that home sales in the second quarter of this calendar year in the top seven cities have dropped 58% from the preceding quarter.
During the April-June quarter, close to 24,570 units were sold as against 58,290 units in Q1 2021. National Capital Region (which includes New Delhi), Mumbai Metropolitan Region, Bangalore and Pune together accounted for 74% of the sales in this quarter.
The number of new launches during the quarter in the top seven cities fell 42% when compared with the preceding quarter. Around 36,620 new units were launched during the second quarter and 51% were in the southern cities of Hyderabad, Chennai and Bangalore. The new units in the first quarter stood at 62,130.
Interestingly, pricier homes were in greater demand during the quarter. The premium budget category (priced in the 8-15 million rupees range) saw the highest number of launches (36%), followed by the mid-range segment (4-8 million rupees). Affordable housing launches accounted for just 20% of the new supply in Q2 2021.
However, when compared with the same period in 2020 there is a steep 93% rise due to last year’s lower base. Only 12,740 units were sold in the April-June quarter last year amid a strict lockdown in April and May. This had brought all economic activities to a standstill and the country’s gross domestic product had contracted 24%.
The second Covid-19 wave definitely impacted overall residential property market activity in the second quarter this year when juxtaposed against the preceding quarter. However, compared to the corresponding period of 2020, the sector displayed remarkable resilience.
In the backdrop of developers adopting technology in their businesses, there was a huge yearly jump in both new launches and sales. Importantly, the localized lockdowns and restrictions did not dent activity as much as the complete nationwide lockdown last year.
Restrictions are now easing across cities and the vaccination drive is gathering momentum. We, therefore, anticipate residential demand to see steady growth in the upcoming quarter. The previously-noted structural shift in housing demand continues – many current homeowners seek to upgrade to larger homes and the previously purchase-averse millennials remain very active property buyers.
The April-June quarter this year also witnessed the peak of the Covid-19 second wave with daily cases touching over 400,000 in mid-May and the daily death toll over 4,000. The number of daily cases has come down to under 100,000 and many states have now eased lockdown norms.
However, medical experts have warned against any complacency and forecast that a third wave may happen around the September-October period. They have also stressed the need to step up vaccination drives to counter the impact of the third wave. Currently, under 5% of the population has been vaccinated.