A rebound in India’s residential property market will be influenced by the intensity, spread and duration of the COVID-19 pandemic. The government stimulus measures and monetary policy adjustments by the Reserve Bank of India (RBI) will further mitigate the effects of the pandemic and help steady consumer confidence in the residential property market, according to ‘India Residential Market Update Q1-2020’ released by JLL, India’s real estate consultancy firm.
The homebuyer community deferred their purchase decisions due to the evolving COVID-19 outbreak, which led to sales declining by nearly 30% in Q1 2020 on a y-o-y basis. “The impact of the ongoing pandemic on business activities became more prominent since the beginning of March 2020 in the country” adds the report. However, even though new project launches came to a standstill in March, Q1 2020 witnessed a rise of 3% in new launches as compared to the same period last year. Q1 2020 recorded new launches of 40,574 units compared to Q1 2019.
“The COVID-19 pandemic is expected to weaken GDP growth, which is expected to fall below 5% in FY 19-20 and potentially reach 2008-09 levels in FY 20-21. However, the residential real estate market appears to be at an advantageous position today as compared to the global financial crisis, led by a series of structural reforms by the government in the past five-to-six years,” said Ramesh Nair, CEO & country head, JLL. “When the COVID-19 scenario stabilises, factors such as better-priced deals, the enhanced financial health of banks and greater demand from end-users will aid in improving buyer sentiment. The sales are expected to regain some traction towards the end of 2020 supported by the festive season during that period,” he added.
Owing to the economic slowdown as a result of the current situation, consumer confidence has also taken a hit, which is having a direct implication on the home buying decision process. Lower mortgage rates, combined with other measures taken by the government to improve sentiment, is expected to arrest this declining trend. These factors will further aid in the recovery of the residential market in India, Nair said.