There has been much talk in recent times over whether property prices will fall in the wake of COVID-19, and also there is a situation of large stock of unsold inventory; again as per a report which I read in April stood at ₹3.7 lakh crore.
I do not believe that developers will be reducing prices any time soon. We are already operating on wafer-thin margins. There are several reasons for this – high taxes and development charges , rising raw material and labour costs, and with the pandemic even higher selling cost. In fact, thanks to the Covid-19 crisis, the realty sector is expected to incur losses of ₹1 lakh crore.
We’re told people aren’t interested in buying property now, in the hope that prices will fall. From my experience of the real estate sector, this isn’t strictly true. Yes, there has been some uncertainty in the market, but savvy customers have now realised this is actually the time they should be looking at buying their homes.
The fact is that prices have been stable for some time now, and over the last four to five years, have only seen a marginal rise, if at all. Home loan rates are at their lowest in the last 15 years. And if inventory levels are currently high, that doesn’t mean they will remain that way forever.
Going forward, with developers launching fewer projects, supply will be limited, and in certain healthy markets, which have been faring well even in these times, I believe that demand could catch up with the supply. Prices, particularly in A-category projects, will go up, rather than down. For some reason, though, customers keep expecting that developers will go out of their way to woo them with lower prices. The latest we’ve been hearing is – ‘So what is your lockdown offer?’ Or customers put it another way – ‘What is your Covid discount?’
Of course, there may be some cases where developers will offer discounts for slow-moving projects, in the hope of kick-starting a turnaround. This only means, however, that they will absorb these losses themselves. Such stray instances cannot be considered representative of overall price trends.
The Covid-19 crisis isn’t going away for a while. But India has already seen the first human trials of a vaccine and hopefully, things will improve. Through this crisis, people have begun to realise that nothing brings you more security than owning your own home.
But it’s worth remembering that as sentiments rise – and recent industry reports are already indicating that this is true – prices will follow.
So, don’t wait for prices to ‘correct’ before you make your home-buying decision. That happened a long time ago, and they aren’t going to fall much further now.