Problems galore for real estate industry amid COVID-19 pandemic
The residential real estate sector is witnessing a low demand and large inventory pile-up, owing to the lockdown enforced due to COVID-19 pandemic. However, the industry was already struggling, especially in the last one year or so. The nation-wide lockdown has only added to the woes.
On the other hand, home price levels have decreased a bit, reflecting the large inventory overhang. According to the ratings agency India Ratings, the demand for residential real estate could remain suppressed even in FY21 in the wake of increasing risk of COVID-19 spread. Although Mumbai and the NCR region reported nearly 5 per cent drop in house prices, there are some exceptions.
Chennai and Bengaluru surprisingly saw a price increase of nearly 13-16 per cent. But, the larger picture is quite concerning at this juncture, looking at how the virus has spread across several countries. The housing market, which has already been battling for survival, is expected to undergo further disruption due to COVID-19 pandemic. The affordable housing could be the worst affected among all real estate categories.
Talking about the development, Anuj Puri, chairman of Anarock Property Consultant said, “The affordable housing segment will be severely impacted by the Covid-19 outbreak, as the target audience typically has limited income and unemployment fears currently loom large.”
Around 610,000 affordable housing units are under construction across the top seven cities in the country, as per Anarock. It also said that the unsold affordable housing stock could rise by 1-2 per cent on an annual basis. Additionally, India Ratings is also expecting a suppressed demand for residential real estate in FY21. The rising uncertainty over credit availability, jobs and economic condition can possibly change the entire outlook of the industry in the coming months