The COVID-19 pandemic had hit the economy and the country’s GDP is expected to contract by 10% this fiscal year. Steep fall in stocks and mutual funds have eroded wealth of many and now people are planning to shift their investment
strategies towards a safer asset in the long run. And nothing is better than investing on real estate as it provides both emotional and financial security for years to come. If we make a comprehensive analysis of the current demand-supply trends in Mumbai’s real estate, it becomes evident that a sustainable recovery is already in this sector is possible. Here’s how:
Increased value of homeownership
Safety, security, privacy, and physical distancing have found a new status of
importance since the outbreak of the pandemic. Owning a home like 2 BHK in Goregaon east offers an unparalleled sense of security and stability especially in times of uncertainty. Considering the current scenario, even in the post lockdown unlock phase, a lot of people will continue to work from home and a separate room for most of the family members will find greater weightage in home purchase decision making.
With that in perspective, luxury segment properties have risen in demand. It does make plenty of sense to switch to them as spacious residential properties are the future. Now that work from home and self-quarantine has become the new normal, many are opting to settle away from their offices in a relatively larger house. Furthermore, luxury properties promise the best quality lifestyle, which is probably too hard to find in today’s times of uncertainty, pandemic outbreaks, and air pollution.
Price correction and festive discounts
According to various reports, prices of properties across some of the costliest cities such as Mumbai have been corrected by at least 10-15%. What’s more, in the run-up to the festive season, developers are doling out several offers on the best flats in Mumbai, ranging from cash discount, waiving of GST and stamp duty, and subvention schemes. Properties by premium developers such as The Dynamix Group have also been designed in a way that shall offer you value for money in the long run.
Also, in a bid to boost the economy, the government is pushing sustained demand by providing easy access to home loans, loans against property, and other credit instruments at all-time low-interest rates. Today, the cost of homeownership is perhaps the lowest in a decade and EMIs have come down to almost ₹700 per lakh.
And the counter currents…
Having said that, there are times when the market can no longer afford a further dip. One should not forget that certain fundamentals could work to raise the current price levels even during such circumstances.
For instance, new primary launches are likely to remain muted as the country is still in partial lockdown and real estate activities haven’t resumed fully. Developers may not acquire new projects and will focus on selling their existing inventory. This may lead to a fall in inventory and depleting supply. When supply falls short of demand, prices are likely to escalate. Therefore, those who make a buying decision early are likely to be benefitted more than those who delay their decision.
Also, there will be an increase in developer’s expenses in the future due to the lack of government stimulus packages and expensive premiums charged by town planning authorities. Furthermore, there is likely to be an increase in the cost of construction as construction workers will need to be well-equipped in their working environment. Plus, there will be massive investments in the latest technology which is going to be quite expensive. All this implies that there might not be any further price reduction in residential real estate than this but the only uptick if any price change happens.
In conclusion, it will be prudent to state that this is the perfect time for home buyers and investors to get in and make the purchase. Fence-sitters and opportunistic buyers, who had put investments on hold due to high prices, are already fast-tracking their buying decisions.