Not with standing the deadly second wave of COVID-19 that led to severe economic repercussions in the months of April and May, signs of recovery for demand in residential real estate were visible in June with a pan-India price growth of 1.7% during the quarter, revealed the latest Magicbricks PropIndex Q2 (April-May-June) 2021.

Despite the slump during April and May, the demand for housing in June’21 rebounded to the March’21 levels.

The intermittent lockdown due to the second wave and the continuance of Work-From-Home (WFH) policies ensured a rise in demand for 3BHKs and above as home buyers are looking to upgrade for the need of an extra room to suit the requirement of home-office. This shift has led to the rise in demand share of 3BHKs and higher configurations in Delhi-NCR, Hyderabad, and Kolkata, reaching an all-time high of more than 65% of the overall demand share in all these markets.

Commenting on the PropIndex report, Sudhir Pai, CEO, Magicbricks, said, “Unlike the first wave, the recovery in demand for residential real estate has been faster in the second wave. The residential markets of Bengaluru, Chennai, Thane, Noida-Greater Noida, Kolkata, and Delhi witnessed price corrections ranging from 1%-2.3% during the quarter that also saw rising medical expenses and debt. This rise in price reflects the inherent strength of the housing sector even during these troubled times. The quarter also witnessed a rise in supply across pan-India by almost 8% due to new launches, with Hyderabad seeing a maximum jump of 20%.  This recovery can be attributed to factors such as a consistent demand in the large sizes properties and a higher flow of global PE funds ensured by good risk-adjusted returns by the sector. This swift recovery signals a revival in stability in the industry.”

The maximum impact of the crisis was seen for the middle and low-income buyers who usually look for smaller houses with lower configurations. However, most premium, and high-income buyers were relatively less impacted by the crisis in terms of the money flow. This trend has led to the fall in demand for lower configuration, while the demand for bigger houses persisted during Q2 2021.

Key takeaways from Magicbricks’ Propindex Report Q1:

Delhi: The residential real estate market in Delhi witnessed a 2% QoQ price growth during Q2 2021. The price growth was primarily on the back of rise in price of under-construction projects, which rose by 10.8% YoY. However, the prices of the ready-to-move property remained stagnant during the same time-period. Change in supply patterns and buyers’ preferences for premium and larger units were a major factor contributing to this trend.

Bengaluru: A dip of more than 25% in demand during the second quarter of 2021 was observed. However, the prices of properties continued to show a resilient outlook as they grew slightly over 1% during the same period. The state government has started assisting property taxpayers during the lockdown by extending a 5% property tax rebate till June 30 in the city.

Chennai: The demand for residential houses declined by 17.9% in the quarter ended June 2021, compared to-3.7% in the first quarter. The housing prices in the city and its suburbs however increased by 1.5% despite the lockdown and business closures.

Hyderabad: The city’s residential market witnessed an increase in the launch of new projects, resulting in an upward revision of property prices in both under-construction and ready-to-move segments. The increase in property price resulted from a shift in demand towards bigger homes with better social infrastructure and recreational facilities along with rising construction costs.

Mumbai:  Mumbai’s real estate market too faced some headwinds, registering some contraction in the residential demand. However, with various supporting steps taken by the developers including easy and affordable payment plans, extension of the 2% stamp duty benefit, and various freebies and offers, among others, helped limit this decline in demand to just 16% QoQ as compared to national demand decline of over 23% QoQ.

Pune:  Despite the ongoing crises and slowdown in the real estate and infrastructure sector, the residential property prices in Pune registered a marginal QoQ growth of 0.7% during the quarter ended June 2021.

The PropIndex also suggests that the momentum gained in the last six months will continue across both supply and demand, especially due to the emerging needs of consumers for large size houses and all-time low interest rates. However, caution is required given the resurgence of COVID cases in the country and threats of another streak of lockdowns. The future of the sector is tied to speedy vaccine drives and completion of infrastructure projects like the metro and major highway projects.