Boost For Housing This Festive Season
The trend of the Indian festive season becoming the annual high point for housing sales originates from traditional sentiment. Simply put, it is considered a fortuitous time to invest in wealth-creating assets. While traditional sentiment is still involved, it eventually ceased to be the most important driving factor. Sales in this period are now primarily driven by the fact that developers and banks roll out the most attractive offers of the entire year during the festive season. That said, festive season 2021 is unique in many ways. There is also a lot of demand for homes — both old demand (pent up from before the Covid-19 pandemic) and new demand — coming from people who were content with renting homes previously. One of the most defining features of today’s housing demand is that even the millennials are now on the market for homeownership. This generation previously preferred renting so that their money was free for other investments and purposes.
SALES ON A HIGH
With Covid cases relatively under control as on date and the vaccination drive in full swing, we anticipate housing demand and supply to see an uptick in the upcoming festive season. While a few developers have already increased property prices on account of rising input costs and increased sales within them, there are many who still continue to offer deals and discounts. The home loan rates also continue to be their lowest-best. All these factors coupled with the growing quest for homeownership amid Covid-like exigencies will drive housing demand in the upcoming quarters.
As per ANAROCK Research, current trends suggest that we may see at least 10-15 per cent growth in housing demand in the ongoing festive period (Oct-Dec) across the top seven cities against the preceding quarter. In Q3 2021, the top seven cities saw total housing sales of nearly 62,800 units — already the best quarterly sales since the pandemic.
Interestingly, if our current predictions hold true then the ongoing festive quarter will see at least 35-40 per cent yearly rise in overall housing sales across the top seven cities as against the same period in 2020. In Q4 2020, the top seven cities saw total housing sales of nearly 50,900 units.
FACTORS FUELLING DEMAND
Above everything else, the pandemic had the effect of intimidating people, institutions, and markets, inducing a feeling of having no control over what was happening. Everything depended on what a virus did next, and how people reacted to it. Life became impossible to predict and the media was filled with horrible images of death, devastation, and danger. For a long time, jobs were lost at worst or uncertain at best, salaries and markets nosedived, and most people’s investments lost value.
In this environment, people tend to long for a sense of stability, control, and predictability. To the backdrop noise of constant warnings to stay at home, and with offices and schools closing indefinitely, our homes became our first line of control and defence. Within our four walls, we are in control of our lives and can safeguard our families. This inevitably led to rise in housing demand. The normal laws of the market will begin to take hold again. Increased demand leads to increased property prices, and increased consumption and decreased inflation leads to higher lending rates.
Nevertheless, the fundamentals for a sustained revival phase are strong because the current housing demand is considerable. The onus of fostering and nurturing this demand long beyond the festive season lies on RBI and government support and interventions, and on developers who decide at what price they should sell their properties.
