According to CBRE data, housing sales in July-September 2020 quarter increased by a strong 86% on a quarterly basis
The global pandemic has brought to fore the importance of real estate. It brought a silver lining for the sector as people realised the value of owning a home. Other than being a tangible asset, a home is the only safe space in a lockdown. Therefore, there was an upsurge in the younger generation showing interest in home buying. Millennials who favoured rental rather than self-owned homes started looking for freedom from a lifelong rental trap.
Despite the corrective measures that were put in place to battle the adverse effects of the pandemic, the second wave of Covid-19 caused further dents in economic growth. However, to overcome the overwhelming effects of the pandemic and boost the real estate market, the Maharashtra government decided to lower the stamp duty which led to a further upswing in the luxury residential market in Maharashtra. It also encouraged people to buy houses and had a huge impact on the decision-making factor in the minds of the people buying houses. The move had substantially improved homebuyer sentiments and property registrations and led to higher job creation and tax collections for the state. It created a positive cascading effect enabling the industry to take a lead in the revival of the economy and sector.
According to CBRE data, housing sales in the July-September 2020 quarter increased by a strong 86 per cent every quarter. As against 12,000 units in Q2 2020, 22,000 homes were sold in the top seven cities in Q3 2020. Strong policy support through last-mile funding mechanisms provided by the government for delayed housing projects, low mortgage rates, reduction in stamp duty and property registration fee in a few states, along with incentives and attractive payment schemes offered by developers, has helped in boosting stakeholder sentiments, which has strengthened the confidence levels of end-users and fence-sitters.
Another pandemic-induced change is the demand for larger spaces where people can have a separate place inside the house for various tasks. The demand for larger homes has risen since the pandemic hit India. As everyone is stuck at home for extended periods due to the pandemic, the situation necessitated a large enough home to support activities such as office work, study area, and entertainment. Consumer demand is getting modified due to these factors, leading to a rise in demand for larger homes. As the base price progresses, stamp duty to be paid increases, making it a huge incentive to buy were it to be reduced or waived.
Hence, the state governments should consider offering stamp duty waivers to lessen the burden on homebuyers and support the real estate sector. The sales would be on a rise again as people would try to avail the stamp duty reduction and buy new houses, to upgrade their lifestyle or as an investment.
The author is Director, S Raheja Realty
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