Real estate Market Post COVID-19 Second Wave & The Future
After the impact of the second wave of COVID-19, all activities in the real estate industry stopped abruptly at the beginning of March’21. Although the economy began uninterrupted since the last lockdown, the situation remained bleak until now as construction activity halted due to labor shortages, while sales declined due to concerns about economic growth.
Without the possibility of a site visits during a foreclosure, real estate developers and brokers are upgrading towards using digital technology to launch new projects and market their properties with great success. From a bright angle, the pandemic has accelerated digital real estate adoption, which will significantly help change the way real estate is sold across the country.
New Laws & Proposals
As the real estate sector supports around 250 other supporting industries, the government should consider increasing tax collection on the purchase of residential units, which will help create a ripple effect on the economy. Following the Maharashtra model, other states must reduce stamp duty to create a win-win situation for all stakeholders. Maharashtra has shown that this move has benefited buyers and developers. And it is interesting to note that state treasury revenues are also increasing.
With LKNB still facing a liquidity crisis, the government could consider the possibility of creating more programs such as the Rs 25,000 million Special Window for Affordable and Middle-Income Housing (SWAMIH) to ensure speedy completion of all blocked and distressed projects. Programs like these will help open up funds for banks and lending institutions and ensure that home buyers have their dream homes.
The government should also consider expanding the Credit -Linked Subsidy System (CLSS) for Middle Income Groups (MIGs), where the initial interest subsidy is up to Rs. 2.7 100,000 was given to first-time homebuyers after March 31, 2021.
Increase in Demand during Festivals
Home sales began to rise in October’20 due to demand and the euphoria of the festival. The drop-in mortgage interest rates to around 7% and housing prices below the house coupled with attractive special offers from money-hungry developers are positive factors that reopen consumers to the market, albeit at a slower pace.
The reduction of stamp duty on property registration in Maharashtra is a significant change. This has been an essential catalyst for increased sales in two key markets – the Mumbai Metropolitan Area (MMR) and Pune in the last three to four months of the year. This trend continued till the stamp duty reduction took effect in March 2021.
Demand for larger homes is driving sales as we see many buyers decide to renovate their homes based on size. The market is concerned with the massive cancellation of apartments booked before COVID-19 arrived, but fortunately, the situation is under control as there is little such demand. Demand from NRI customers also increased during this period.
How the Government is Supporting this Situation?
To help the real estate industry survive an unprecedented health crisis, the Center has announced various measures. These include the implication of Tenancy Law passed on June 2, 2021, requests for a “force majeure” clause in the RERA framework to extend the project completion date from 6 to 9 months, an extension of benefit subsidies for the middle-income group, and tax easing to allow the sale of homes worth up to Rs 2 million. with a 20% discount on the circular rate
Moreover, the government has limited budgets to address the various sectors of the economy that collapsed in the April-June quarter as the country’s gross domestic product (GDP) contracted by 23.9%.
Initiatives taken by the government and the Reserve Bank of India (RBI) to stem the slowdown are beginning to bear fruit, with the contraction narrowing
to 7.5%. Further, The Delhi -based economy, the National Council for Applied Economic Research (NCAER), is expected to be positive in the next two quarters. NCAER expects growth of 0.1% in the October-December quarter and 2% in the January-March quarter.
The positive economic growth outlook in Q3 and Q4 of this fiscal year implies stability for the real estate sector but it will need government support in the next budget to regain its glory. At the macro level, the reason for the possible increase in demand for housing and commercial space in the coming months is not difficult to predict as it relates to the potential recovery of economic growth.
In Conclusion, there are many possible assumptions about the growth/ contraction in the Real-estate & Construction Industry. However, with Digitalization the market has high rates of growing its business in the coming months.