As curbs start being relaxed, the sales in the real estate sector are expected to resume. However, it is expected that a large section of the buyers would shift their focus towards affordable homes. The demand for affordable homes was already rising gradually before the pandemic, but now the change is going to take place very fast. The real estate sector plays a major role in the Indian economy, accounting for about 7% of the GDP. Apart from this direct contribution, more than 250 other industries are directly related to the real estate sector too. Without even counting these related industries, the real estate sector itself provides employment to more than 50 million people in various fields of the industry.
Thus, such changes in the real estate sector would in turn cause changes in the economy as a whole. After an analysis of the buyers’ sentiments, it can be concluded that about 67% of the homebuyers who were planning to buy homes before the pandemic still want to go ahead. This is good news for the developers and the real estate sector as a whole as it would help the industry get back on track. However, 73% of these buyers have revealed that they’d be reducing their budget by about 10-15%.
Most of the buyers would be going for affordable homes now instead of the premium sector. Buyers will move towards more affordable homes in a post COVID market, as everyone will try to reduce risk. Many would prefer buy homes at this juncture as prices are affordable and there are plenty of good payment plans available. Additionally, the added benefits of having a stable & alternative source of income through rental income will also drive demand in a significant way. In sync with the trend, major developers like Godrej, Shapoorjee, VTP, Supertech etc. are coming up with new payments plans in the peripheral areas of the city, where prices are affordable. In the last few years, the real estate sector was already going through hard times due to a slowdown in the industry and the economy. This slowdown had emerged as a result of a number of regulatory measures and economic reforms.
These included the establishment of RERA to improve transparency, demonetisation, introduction of GST, etc. Although aimed to benefit the economy in the long run, these moves caused short term problems, including a slowdown in the economy. The real estate developers faced a liquidity crisis which led to stalling of their ongoing projects. The situation was only starting to improve, with the government announcing a number of measures to revive the real estate sector when the pandemic broke out. As a result of the economic slowdown which caused a fall in the purchasing power of the buyers, more and more buyers were starting to go for affordable homes. Now, with the lockdown, affordable homes are becoming a more popular choice. In Post COVID, a large workforce will work from home. Hence, they would need bigger spaces, wherein they can work peacefully. Hence from center of cities, buyers will move to peripheral areas, where large houses are available at affordable prices It can also be observed that more buyers now prefer to buy ready to move homes over the under-development ones. Although the purchases might be delayed by a few months, the sales are expected to rise again.