Although the sales of residential real estate surged in 2021 in comparison to the previous year, the sales of the homes priced below Rs. 50 lakhs plummeted in the first half of 2021. This is a clear indication that the consumers who are of the lower price segment got hit badly due to the COVID pandemic as the potential prospects and buyers of the segment suffered a loss of income as suggested by the latest market assessment report, ‘India Real Estate – Residential. January to June 2021’ published by Knight Frank India.
The share of the sales of residential real estate of properties lesser than Rs. 50 lakhs reduced by around 50 basis points and it constituted about 42% of the sales of the residential real estate in the period of January to June 2021 in comparison to the same period in 2020 which was 47%. Housing units costing from Rs. 50 lakhs to Rs. 1 crore showed an improvement over the figures of 2020 by roughly 400 basis points standing at 39%, cites the report. Homes costing more than Rs. 1 crore constituted around 19% of the total sales of the first half of residential real estate sales in 2021, said the report published by Knight Frank.
The reason for the drop in sales of affordable homes
The Knight Frank report said that the reduction in the proportion of affordable homes in the overall sales in the first half of 2021 can be accounted for the challenges thrown by the pandemic. The reduced buyers’ sentiments can be attributed to the insecurity thrown to the middle class by the pandemic like reduction in income, threats of job loss, economic uncertainty, consumer price inflation and other such challenges as thrown by the pandemic.
In totality, the sales of the residential units in different or the eight major markets like Pune, Mumbai, Bangalore, Delhi & NCR, Ahmedabad, Kolkata and Chennai rose by the margin between 22% to 150% on a year-on-year basis compared to 2020. In the whole of the nation, 99,416 homes were sold between January to June 2021 which is 67% higher than the figures of 2020 on a year-on-year basis.
During the early part of the year 2021, the sales of the residential sector were largely contributed by the two markets, namely, Pune and Mumbai that together contributed more than 45% of the overall sales of the key markets suggested the report by Knight Frank. The report opined that the surge in sales in these two markets could be majorly attributed to the jolt provided by the cut in the stamp duty rates by the Maharashtra government for a limited period.
Such an increase in the buyers’ sentiments also triggered a drop in the prices of homes from 2020. Out of the eight major markets, the sale in the four markets was witnessed to grow marginally or remain the same in H1 2021 on a year-on-year basis. Along with that, the new launches in the eight major markets were observed to have increased by 71% on a year-on-year basis and in this case, the two markets of Pune and Mumbai did not show any added increase as all markets witnessed new launches significantly. The report pointed out that the new launches in Q2 2021 have surpassed the launches in the same quarter of the previous year by 388%.