Will Festivals boost the Realty Market in 2021?
The ongoing COVID pandemic, along with the subsequent lockdowns, has crippled many of the global markets. The most affected industries include the service sector, automobile industry, hospitality, and of course, the real estate market.
Construction sites faced regular delays; dates were pushed around as the travel restrictions and lockdowns made it hard for the materials and workers to reach the site. This constant delay caused many developers to put their projects on hold, not to mention most of the buyers backed down because of the waning job market.
Since last year, the government and many companies have been offering leeway in property tax, stamp duty, and registration rates in hopes of keeping the real estate market afloat. And it has been mostly successful, creating an upward trend in the real estate market but still a long way off compared to before the pandemic.
The Realty Market during festival season
Even after all the hurdles set by COVID, the realty market might still see a decent, if not a massive, rise in registrations and sales during the upcoming Indian festival season.
After all, India sees a large surge in purchases every year during celebrations, whether it is Diwali, Navratri, Dusshera or Ganesh Chaturthi. And almost all industries benefit from it, getting a boost of momentum during this period.
Apart from the discounts, festivals and celebrations are considered a time of good fortune and blessing perfect for buying expensive things like a house or starting new ventures. As such, it’s more than likely that the people who held back before will be actively buying or will at least start looking around for properties during this period. Developers and most business owners are expecting the market to pick up as the festival season starts up; most of them are already back on track with their projects and assets.
As of now, the market holds a lot of unsold stock leftover from this year; as such, the developers and realtors have started adjusting the prices and incentives to reel in the buyers during the upcoming festival season.
Banks also offer their lowest interest rates during these celebrations at around 7% or less, encouraging people to buy new homes and property. In addition to this, some real estate companies have also introduced new, more flexible schemes like postpaid homes and variable rent rates to entice fence-sitters.
RBI’s latest policy to rising demand during festive season
Just last Friday, RBI unveiled its new policy, in which they decided not to change the key policy rates set back in February. There are varying opinions on the matter, but overall, it’s good news concerning the housing sector.
In light of RBI’s policy, the CREDAI National President Harsh Vardhan Patodia remarked “With the outbreak of the second wave and the fear of a third wave, RBI’s guarded move to hold the repo rate at 4 percent reflects the continuation of its accommodative stance ensuring the lowest lending rates to keep business operations across sectors.”
In case you didn’t know, the repo rate is basically the interest rate at which RBI lends money to commercial banks. A low rate of 4% makes it possible for commercial banks to lower their interest rates as well, especially for home loans. For reference, the repo rate set by RBI in 2018 was 6.25%. He also added, “We are optimistic that home loans will continue to be affordable, thereby propelling the growth of the housing segment,”
Samantak Das, the chief economist, and head of research and REIS, India, JLL, also commented on the matter, saying, “The Reserve Bank of India is expected to hold policy rates at the existing historically low levels, while prices will remain mostly range-bound. The resultant affordable buoyancy will continue to attract fence-sitters and serious homebuyers,”
RBI’s policy will certainly make the situation more favourable as the low-interest rates coupled with the buyer intent during festive seasons will take care of ready-to-go stock held by the developers.
Last year, during the festive seasons between August and October, companies like Mantra Properties sold over 675 units, bringing in Rs 325 crore. The demand then was for 2BHKs and 2.5BHKs ranging from 50 lakhs to 80 lakhs. Today’s market is much more favourable than last year so we can assume that it will do very well in the coming months.
In any case, it’s likely that the real estate market will regain much of its former strength in Q4 of 2021 compared to the first few months.
Conclusion
As mentioned before, builders have an abundance of ready-to-move units numbering in the thousands. But the demand will be just as high so try to avoid unnecessary delays when you find the home of your dreams. There will be a lot of festive offers from no-cost EMI and cashback to personalised financing plans from companies. These will sway the initially hesitant buyers, who will be the key to driving the momentum to the end of the year.
Investors, on the other hand, are looking forward to commercial properties during the celebrations. It’s more than likely that units will be sold in bulk to companies and new businesses at a discount.
With the economy somewhat stabilising, this festive season may pave the way for a full revival of the real estate market.
Disclaimer: The views expressed above are for informational purposes only based on industry reports and related news stories. PropertyPistol does not guarantee the accuracy, completeness, or reliability of the information and shall not be held responsible for any action taken based on the published information.
