Housing sales may fall but prices won't
„Offtake could slump by up to 35% this year
Despite projections of housing sales dropping by up to 35 per cent this year, real estate players are trying to hold the property rates at current levels while giving away discounts and offers to sweeten the deals.
Residential property sales is projected to drop to 1.70 lakh to 1.96 lakh units across top seven cities against 2.61 lakh units in 2019, a drop of 25 to 35 per cent.
The Covid-19 scare has badly hit residential real estate business and the sector has come to a standstill. With a screeching halt to site visits, discussions, documentation and closures, the early indicators depict that the sector is likely to face a tough time for the next few quarters. The sector's recovery has also been pushed further away by at least a couple of years.
However, realtors are putting up a brave front and assert that they will withstand price pressures. Denying reports that the sector could witness a steep fall in prices in coming quarters, Niranjan Hiranandani, president, Naredco and Assocham, said: "The 21day lockdown translates into no work at sites, no walk-ins so consequently, no sales-and logically, no change in price-points."
"Assuming that post the lockdown, we will get back to normal life, the 21day break in business and commercial activities will have created a gap, filling which will take time-and how long is anyone's guess," added Hiranandani.
"Housing prices will remain stagnant since demand in this scenario is not influenced by prices but by perceived safety of site visits," said Anuj Puri, chairman of Anarock Property Consultants.
Ritesh Mehta, senior director and head, west India (residential services), JLL India, too, finds that none of the developers have gone down on card prices.
According Snehil Gautam, head marketing and growth, Housing.com, the real estate sector has been weathering tougher times for the past few years. It has seen a drop in sales post-demonetisation and the implementation of the RERA. The IL&FS debacle and the consequent NBFC crisis have not been kind to of to the sector either.
"Property prices have remained stable even during the tougher times. Real estate developers have been offering discounts and incentives though," he said.
Some severely stressed developers will try to sweeten deals with lower rates, but these are not corrections but project level discounts, added Puri.
The real estate sector is also relieved by the fact that the unsold inventory has come down from their peak levels and will remain stable as the new launches are also equally affected.
According to an Anarock report, new launches may witness a 25-30 per cent decline in 2020- from 2.37 lakh units in 2019 to anywhere between 1.66 lakh-1.78 lakh units. Hence, unsold inventory this year will largely remain stable, with single-digit annual decline of around 1-3 per cent.