Real Estate Industry Gets Boost To Help Homebuyers And Enhance Liquidity

By Magnolia Realty | Aug 15, 2020

A famous American economist says that when people stop purchasing things, then the economy slowdown rolls into a recession phase. The present scenario of India real estate market is going through a slowdown and to avoid any recession, the government and industry, both works out best for homebuyers. The main objective is to improve sentiments, the revised policies and tax structure for both homebuyers and stakeholders.

The State of Residential Housing Sector

There is a stark difference between affordable and luxury residential housing segments. In both segments, the pre-COVID situation showed a steady rise of inventories but in luxury segment sales figures have dropped significantly.

  • On the other hand, there is no much difference in the affordable section during the pandemic. People have understood the value of their own home, so the demand has increased in the affordable section. Consequently, the affordable real estate industry has witnessed a spike in booking for apartments in June and July 2020.
  • At pan-India level shows that close to 13.20 lakhs units in luxury and mid-luxury housing remained unsold in the market. The economy is heavily depending on the real estate sector, so in that case, if the whole unsold inventory gets exhausted, an enormous Rs 9.40 lakh crore or 5% of our whole GDP could be generated.
  • Properties priced below Rs. 50 Lakhs has a number of good enquiries, and ready-to-move (RTM) houses have an edge over unfinished flats.

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Advantages of Under-Construction Properties During Pandemic

  • Under-construction properties have their own benefits. In this pandemic situation when people are starved of liquidity, invest in a good under-construction property will be a good move. There is no urgent need of paying the whole amount or regular EMI’s. If you are taking a home loan, the bank will charge you a fixed EMI based on a payment schedule and that also depends on the development of the property.
  • In a situation when you have less liquidity but you need a home of your own. If you can wait for 2-3 years, then it is also advisable to go for a new project. First, it will give you wider choices and more options to select from. Secondly, you access the layout, location, future development and easy EMI options.
  • When every investment is failing, real estate and gold are the only viable option left for you. An advantage of buying an under-construction property is purely for investment purpose, as most of these properties are developed at the outskirts of the major city areas, so the chances of price appreciation with these projects is higher.

Incentives To Boost COVID-Real Estate

  • To attract more investments, and promote affordable housing segment, the government, both state and central has come up with a new set of reforms.
  • The set of reforms would offer several exemptions and incentives on building norms, helping developers in easy planning, construction and occupying. The focus is on the mission: housing for all, by promoting private-public partnership.
  • The Reserve Bank of India has already reduced repo rate twice to encourage banks to lend loans to the productive sectors. This is will help the real estate sector in the long run.
  • Measures such as the extension of DCCO, fresh LTRO and deduction in reverse repo rate will help the real estate sector and consequently uplift the economy.

Surge in Demand of Affordable Housing – Salient Points

  • Properties priced below Rs. 50 lakhs have good traction in June and July. The ready-to-move flats have an edge over under-construction properties.
  • After initial slowdown, the sales in affordable are back 60-70 per cent of normal times.
  • According to a survey, 500-odd respondents said they would prefer to live in projects having 400 plus units.
  • Ultra-affordable housing segment (9 lakh-23 Lakh) saw more booking than any other segment in the month of July.
  • Not all bookings translated into an agreement for sale. In the months of June and July, there is at least 20 per cent cancellation from bookings.
  • Social branding is a crucial factor plays in the booking. People are looking after authentic and quality projects.

 

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