Undoubtedly, the real estate sector witnessed many upheavals during the pandemic like halted constructions, plummeting demand, reverse migration of labour, liquidity crunch, and many more. Along with all these, the buyers’ sentiments also got slashed as there was a marked fear of rampant job loss. In such a situation, what seems evident is that realtors would refrain from investing in the new projects, which would bring down the new launches, and instead, they would be keen on getting rid of their old unsold stock.
The result of this acute liquidity stress would be the realtors would either lessen their prices by offering more discounts or keep the prices stable. If this is what the common sense approach says, then the reality is entirely different, as seen in all India’s major cities, and Bangalore is no exception. After the pandemic, the real estate sector has staged an optimistic comeback with an impressive surge in the sales of apartments, flats and housing units. Although the apartments for sale may not have increased but the top seven property markets of the nation have registered positive sales figures. This was mainly driven by the record-low rates of interests, added discounts offered by the builders and property developers, liberal pricing, and stamp duty reduction in the key markets.
The analysts feel that in Q1 2021, the major demand boosters were reduction of home loan rates by the banks to 6.7%, along with the cut in the stamp duty rates which has qualitatively inflated the assessment of affordability surging the sentiments of the buyers. In this quarter, Bangalore was the only city that registered no reduction in the number of sales of the apartments compared to previous year, standing at 8670 units. Being enthusiastic and optimistic by these buoyant forces of the market, there were quite a few new launches in India’s top seven cities, and Bangalore also witnessed new launches.
According to the analysts, if the current incentives continue, you can expect even more vibrancy in the realty market of 2021 as the end users would drive the demand. And as Bangalore is majorly a user-driven market, the impact of this would be high on Bangalore, boosting the demand and sales of apartments, flats and housing units. To add, Bangalore witnessed the second-highest rate of reduction of the unsold stock which hovered around 7%.
The reason for such a remarkable comeback by the Bangalore real estate market is certainly obvious, points out the analysts. Undoubtedly, the real estate situation at the time of the pandemic was severe, and the buyers’ sentiments were abominably low. The question is what made the situation to change. There were quite a few factors for this dramatic change in the real estate sector of Bangalore. Firstly the government’s measures like reduced repo rates by 75 bps, reverse repo rates and the cash reserve ratio helped the end users to obtain loans and helped the builders with credit facilities. These steps by the government went a long way in supplying the extra liquidity to the realty sector as well as improve the buyers’ sentiments and boost their affordability.
The real estate exponents opine that with the extra liquidity, the developers immediately slashed prices as there was price correction in Bangalore, too, with the builders offering added discounts. With the lowering of the interest rates, affordability already increased in the hands of the buyers whose financial conditions are stable. On top of that, the lowering of the prices and the added discounted offers added fuel to the fire, which propped the sales up in the first quarter of 2021. In other words, the Bangalore real estate developers have no choice left with them but to make ways to clear their stock even at lower prices, and the buyers have a lot of choices with higher affordability in their hands.
To sum up, at present, Bangalore’s real estate market is a buyers’ market, which is of great advantage to the buyers. This is not predictable, how long the market would remain as the buyers’ market, and so the best choice is to buy now lest it changes into a sellers’ market, which is surely going to happen in Bangalore faster than in any other city.