Housing sector

The housing sector escapes the pandemic blues

While the pandemic has had a negative impact on most business sectors, contrary to common perception, the housing sector in bangalore did not suffer, reveals the Economic Survey 2021-22

The survey indicates that house prices rose during the first and second waves of covid-19, contrary to expectations that they would fall. It indicates that there was a 2.7% and 5.3% increase in house prices during the first financial quarter of 2020 and 2021 respectively, compared to pre-pandemic levels in the first financial quarter of 2019.

The data of the Housing prices Index (HPI) of National Housing Bank (NHB) agrees with this positive trend for Bengaluru, where the composite index for June 2019 was pegged at 113, June 2020 at 116 and June 2021 at 119.

This upward mobility in prices is also reflected in an increase in real estate transactions, which soared by more than 40% during the second wave of covid-19 (April-June 2021) compared to pre-pandemic levels in the first quarter. 2019 financial.

The report suggests pent-up demand and improved affordability in response to government measures such as lower interest rates, lower circle rates and reduced stamp duty, have made homes affordable for buyers despite the devastating impact of Covid-19 on the Indian economy. .

Nasir Sharif, co-secretary of the Bangalore Realtors Association India (BRAI), said school and working from home have become a key reason for people to buy bigger living spaces. “Lockdown has actually been a busy time for us,” he said. “There was a 5-10% increase in business, but the availability of good housing options was low in areas near the metro or technology parks. ”

Sharif said the ‘Rs 1 crore plus’ market has done well, but not so economically affordable. However, Anthony Raj, owner of a real estate company, disagreed, saying the housing market had not “boomed”. “Desperate sellers sold properties for far less than expected,” he said. “Builders’ inventory was getting stale, so they bought their own properties to avoid a price drop. ”

But others warn of a future where affordable housing becomes scarce and a home is no longer seen as a necessity. “Developers in Bengaluru are starting to capitalize on the more elite segment of the housing market, for which there are buyers,” said Sudeshna Mitraacademic and research leaders, Indian Institute of Human Settlements. “This is confirmed by the increase in the average transaction price. But real estate agents aren’t learning to cater to middle-to-low income demand. There is an internal crisis that needs to be resolved because the sector is far too focused on the high end of the price segment. Soon, the formal sector may no longer have the capacity to provide basic housing. ”

Speaking of rental transactions, harish swastika, an independent researcher, said more than Rs 1.2 lakh crore (about 1% of India’s GDP) of transactions take place in the urban rental market which is largely informal. Properties are still controlled by the traditional landowner classes who hold their land and assets until their asking price is matched. “The transactions, as recorded in the Economic Survey, come from the formal market. Rental housing is largely a poor people’s market. Bangalore is still an emerging real estate market because there is still urban land to be developed, unlike Mumbai or Delhi which are saturated and their demand absorbed by peripheral cities,” he said.

Mitra said this is a global problem in financialized housing markets, as industry financing primarily seeks high-return projects. The main theme underlying the rise in real estate transactions seems to be that many houses have been bought or sold on new land on the outskirts of the BBMP boundaries, but there is also a shortage of good housing for the middle classes. , said Mitra.