Magicbricks’ Propindex Report Q2 reveals road to recovery for real estate
Real estate price remained range-bound with just 1-5% decline in Q2 2020 in 8 cities
As India’s economy has started getting back to a ‘new normal’ following the COVID-19 outbreak and the national lockdown, the real estate sector has also started to witness some green shoots as home buyers are back in the market, though in lower numbers across Tier-1 cities reveals the latest Magicbricks’ Propindex Report Q2 2020.
Magicbricks’ Propindex Report Q2 2020 suggests the property buyer market sentiments are on the path to recovery with the buyer searches on our property portal set to surpass the pre-COVID levels indicating robust underlying fundamentals on the demand side.
Magicbricks’ research data suggests that amidst the Covid-19 scare, the real estate prices in the top 8 cities observed a 2-9% decline in April 2020 as an immediate reaction to the crisis. However, the overall price decline recovered in the April-June quarter to just 1-5 percent decrease across Tier I cities.
Sudhir Pai, CEO, Magicbricks, said, “India’s real estate sector is on the road to recovery. Prices have shown a marginal decline whereas demand has been steadily coming back. Actions have been taken by the government on the recovery package and the RBI has also reduced repo rates by more than 100 basis points since the lockdown. This augurs well for the industry. Our data suggests that search activity is almost back at pre-COVID levels and this is therefore the right time for developers to grab the attention of the home buyers through attractive deals and offers.”
The markets of Hyderabad, Chennai and Bengaluru, which were India’s best-performing markets in the pre-COVID-19 phase, witnessed maximum price decline but least drop in consumer demand indicating that home buyers are now active in these markets and are looking for exciting deals. Gurgaon and Noida markets in the National Capital Region (NCR), which were already facing headwinds for quite some time, resisted downward pressure on price. Mumbai Metropolitan Region (MMR) fared slightly better as compared to other regions, despite being worst hit by COVID-19. The average price decline was in the range of 0.4-0.8%.
*In Bengaluru, 2.8% (QoQ) price decline in the ready-to-move segment washed away the gains made during the previous six quarters. However, the demand for 1 BHK and 2 BHK configurations is likely to further shoot up due to the reduction of stamp duty for properties costing up to Rs 35 lakh.
*Chennai residential market clocked a 2.3% YoY growth, but the recent pandemic brought a 3.1% decline in prices in Q2 2020. Still, 87% of the city’s demand falls under the 2 and 3 BHK configuration, showing domination of mid-segment consumers
*In Mumbai, most price segments (across price brackets) witnessed a price decline for the quarter but affordability played a major deciding factor for buyers in Mumbai, with houses below Rs.10,000/sqft making up the majority of the demand
*In Delhi, prices dropped across most budget categories, with the highest price decline witnessed in the premium properties costing more than Rs.15,000/sqft. In Q2 2020, affordable houses, especially 2 and 3 BHKs, which cost below Rs.10,000/sqft, witnessed better traction compared to other configurations, making up for a substantial 3 out of 4 property searches in Delhi
*In Hyderabad, after a stellar rise of 50% in five years, the ready-to-move property prices fell by a significant 5.2 percent in Q2 2020. Despite this, the affordable housing trend has continued as 2BHKs and 3 BHKs continued to witness maximum traction in Q2 2020 with 91% of the property searches.
However, it will be interesting to see how these factors play out as the market recovers from the outbreak of COVID-19 and the ensuing national lockdown. Magicbricks data indicates that consumers are back to the marketplace, albeit in lower numbers. Developers are running various schemes and promotions to entice home buyers and drive transactions. The next three to six months will remain key to determine any developing trend in prices and transaction volumes. It has become even more of a buyers’ market with the onus on sellers to make the right interventions to enable the real estate market bounce back.