Good news for those waiting to buy homes, Home prices across the country is expected to come down. The correction in prices will be by 15%, due to Covid 19 impact
By Varun Singh
Liases Foras a real estate research firm did an assessment of the impact of Covid 19 on the real estate industry.
There is some good news in the bad times too. The assessment states that, the residential market revenue shall reduce by 43% due to a drop in sales by 33% and a price correction of 15%.
The other good news is that the report also highlighted the imminence of a price correction up to 20% in the residential real estate market to boost demand.
Which means because of the impact of the pandemic the homes prices will go down which is good for home buyers.
But for real estate industry even if the sales increase by 20% each quarter post lock down it will take at least four quarters after June to reach the stage of December 2019.
With a dampening of demand due to Covid 19, it is essential that both the government and the developer offers incentives to the flat purchaser for a boost in sales says the report.
According to Pankaj Kapoor, MD, Liases Foras, it would cost the government just Rs 26,000 crore to save the real estate industry. The real estate industry contributes Rs 12.5 trillion to the economy.
With a stall in construction activity and no new launches during the lockdown, the assessment revealed a jump in office space vacancy from 12% to 21% by June accompanied by an added pressure on lease rentals.
Real estate industry contributes to 5.5% of India’s employment. The industry is in turn dependent on the global BFSI and IT job market, be it in terms of office space occupancy or holding a bulk share of residential buyer demand.
The analysis pinpointed that the current incentives cater to hardly 25% of the Rs 9.3 trillion inventory.
The remaining 75% of developer inventory which is held by units costing more than Rs 50 lakh is disproportionately neglected.
According to the assessment there are measures to increase the home sales.
The measures to revive the demand of home sales are, such as an increase in the interest exemption up to Rs 12 lakh. As well as a GST and stamp duty waiver for under construction homes.
These measures will incur a cost of Rs 26,000 Crore to the government. But would benefit the industry, that contributes Rs 5.22 trillion of annual production of homes, 25 million jobs, and over Rs 1 trillion of tax collection.
Also Read: Deepak Parekh asks builders to compromise on prices
