COVID-19 2nd wave: Will real estate prices correct further?

Real estate experts believe that the second wave of coronavirus will affect the price and demand of mid and affordable housing. Right now, the coronavirus cases have gone off the charts, and hence everyone is focusing on health above anything else. 

With the second wave, India faced even stricter restrictions on movement of people. This has resulted in the inability of buyers to visit properties and sites and with that construction activities have come to a halt. Due to all of these factors, the construction and project deadlines have been delayed.  

Experts believe that property prices will remain stagnant because homebuyers would withhold themselves from opting a high value purchase in such times where many companies are laying off employees. 

There has been a demand for larger homes in the market. Right now, larger homes are not just a preference but a necessity in a work-from-home and study from home environment. These demands have been more or less met, largely due to discounts and stamp duty concessions offered by some states. 

 “There may be limited scope for builders to increase prices during the second wave as demand has more or less eroded,” says Pankaj Kapoor, founder and managing director of Liases Foras. 

Most of the sales are an upgrade purchase, like shifting from 2BHK to 3BHK. Sales in the 3BHK category have increased due to homebuyers’ preference for larger homes even in peripheral locations.  

Over the past, there have been dips in purchases, but Kapoor says that buyers should take the plunge as they may get the best deal in town due to contraction in demand. Pankaj Bajaj, President Credai, NCR, has taken an optimistic approach and said that “these purchases aren’t lost, but they are postponed”. 

Bajaj believes that it is unlikely for the prices to go up because prices haven’t risen in almost five years. Although he has doubts about the prices going up in the future due to scarcity of new launches. 

Some believe that prices may rise because developers have to pay extra for operating costs and additional safety measures for construction workers. Economically, luxury home buyers were the least affected by the first wave. In the second wave, the mid and affordable segments could be impacted.  

Currently any prediction would be conjecture as there are too many variables, which cannot be forecast.

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