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Prices have already corrected to the lowest in affordable, mid-income housing, says Anuj Puri of ANAROCK

Bavadharini KS | Updated on March 21, 2020

But the impact of the ongoing corona crisis can delay the anticipated price rise: ANAROCK Chairman

The financial impact of Covid-19 can be felt across sectors, and real estate has been no exception. Sales and new launches are expected to be muted in the coming months despite various incentives offered by the Centre, says Anuj Puri, Chairman, ANAROCK Property Consultants. Excerpts:

What in your opinion will be the impact of Covid-19 on residential real-estate demand and prices?

The government advisory to maintain social distancing is impacting site visits and thus housing sales. This impact is not restricted to just one segment but covers all categories, including the high-end segment.

Further, many developers are postponing their new launches, and will wait to see how the situation unfolds over the next month or two.

Given that developers always schedule project launches during the festivals of Gudi Padwa, Akshaya Tritiya and Ugadi, this year will certainly remain muted in terms of launches.

Sales, too, will be dented due to the coronavirus fallout.

Construction activity could also take a hit if the situation exacerbates and the government gives further directives.

But this impact will have no correlation to price movements. Developers are aware that reducing prices will not drive buyers to make purchase decisions, and prices have already corrected to their lowest best, in affordable and mid-income housing.

How are residential real-estate prices likely to move in the next two years? Should buyers wait for lower prices?

From this point onwards, they will remain stagnant for a while and then begin to harden. However, the ongoing corona impact on housing sales may just delay the anticipated price rise. That said, there is considerable pent-up demand for housing by end users, and investors will become active again only once the prices show signs of hardening.

As such, whether to buy now or later is largely a matter of personal preference. But certainly, there will be no further price corrections in the short, mid and long terms.

Which regions are likely to witness a faster appreciation in prices?

Appreciation is not an operative word right now and is unlikely to become one in the next 1-2 years. When it does begin, we will see prices increase in the developing suburbs of the main cities, rather than in the central areas.

This is because inner areas have a lower chance of benefiting from upcoming infrastructure — price growth is usually seen in locations which can witness overall improvement.

However, investors can focus on areas which will benefit from metro connectivity, or which will see better connectivity by road and rail. Connectivity to workplace hubs is now the main attraction for home buyers, even if proximity to workplaces is not an option due to higher prices.

Have the measures taken by the Centre helped residential real-estate demand?

Yes, they have. The government’s efforts to make real estate more accountable via RERA and GST have caused serious interest to return. There are also various attractive incentives for first-time buyers of affordable housing.

If demand has not returned to a considerable degree despite these interventions, it is because the housing sector is still rocking and reeling from the after-shocks of demonetisation and, paradoxically, other policy and regulatory interventions which were put in place to make the housing market more accountable. That said, one of the main reasons for the continuing subdued demand is the lack of employment growth. It is only when people feel assured of their jobs and job growth prospects that they consider home purchase a viable option.

Published on March 21, 2020

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