Prices for under-construction properties rose by 2%
Property search volumes remain elevated at 30% above the pre-COVID level
Noida, January 5, 2021: Notwithstanding the uncertainties caused by the pandemic, 2020 ended on a positive note for the real estate sector with average prices increasing by ~1% in Q4 2020 reveals Magicbricks’ latest PropIndex for the quarter of October-December (Q4) 2020. While the prices for the much in demand ready-to-move segment remained stable during Q4 of 2020, the under-construction segment prices rose by 2%, amidst the recovery phase. The increase in under construction prices was primarily led by western and southern regions.
At the city level, the western region witnessed the most price increments, and prices in MMR (Mumbai Metropolitan Region) and Ahmedabad rose by ~1% and 1.4%, respectively, while remaining stable in Pune. In the South, while Bengaluru remained almost stable, Hyderabad and Chennai witnessed quarterly price increments even though YoY price change was still negative by 1-3%. Prices in the Delhi NCR remained flat in Q42020, with a slight decline in the core markets of Noida and Gurugram. However, it has shown an improvement in affordable locations like Noida Extension, New Gurugram, and Sohna.
The property search volumes remained at elevated levels in Q4 2020 at about 30% higher than pre-COVID levels, after touching more than the 50% hike in Q3 2020, as buyers continued to make a beeline because of COVID-led availability of distress deals and festive season discounts. On the supply front, Magicbricks witnessed more than a 25% increase in property listings in Q4, post falling by ~10% in Q3 due to improvement in new launches and secondary market listings.
Commenting on the PropIndex report, Sudhir Pai, CEO, Magicbricks, said, “With uncertainties around the economy and jobs now stabilising, we are witnessing signs of growth in the real estate sector as well. The economy has also stopped shrinking since October 2020 and now we are seeing a V-shaped recovery in the real estate sector. There are predictions of net positive GDP growth for the ‘Oct-Dec 2020’ quarter at 0.1% and rebound growth at 10% for FY 2021-22, making it surpass pre-COVID levels. With impetus from the government in the form of stamp duty cuts in some states and first-home buyer incentives, buyer demand is expected to stay at elevated levels in 2021.”
The PropIndex report suggests that many businesses will reassess their workspace requirements and the work- from-home strategy in 2021 and that would result in heightened volumes of search in 2021 in commercial as well as residential segments to accommodate the changing requirements.
Key takeaways from Magicbricks’ Propindex Report Q4.:
- Bengaluru- Bigger configuration houses gaining popularity amid WFH culture: In Q4 2020, Bengaluru’s residential market continued to show 3.2% QoQ growth in demand, represented by property searches on our property portals. Due to the festive discount by builders, waiver on stamp duty, and deferred payment plans, under-construction property prices recorded a 1.5% decrease in Q3 2020. However, we saw marginal growth of 0.4% in Q4 2020.
- Chennai-Surge in demand for plots as interest shifts to the periphery: The demand for Chennai’s residential market remained elevated in Q4 2020 despite a marginal decline of 2.3% in Q4 2020. Property listings increased in the city by 13% after a dip of 7.8% in Q3 2020. Under-construction (UC) property prices witnessed visible increment in most price brackets, defying fear of poor economic performance caused by the pandemic resulting in a slowdown in the residential segment.
- Hyderabad–Sustained positive momentum: The search volume rationalized somewhat in Q4 2020 after a significant increase of 48% in Q3 2020. The YoY trend suggests that the residential market is on its path to recovery from the COVID-19 shock. Localities in western and North-Western regions garnered significant interest from buyers due to large scale IT development along with infrastructure developments such as planned phase 2 metro expansion. Ready-to-move properties saw a YoY dip in prices by 1.1% even as QoQ prices improved by 1.1%.
- Mumbai- Western suburbs driving the majority of residential demand: Mumbai witnessed the residential demand increase by close to 30% and the supply by ~38% in the quarter ended December 2020 owing to festive discount and reduced stamp duty by 3% till March 2021. Prices remained flat for the past few years while growing marginally QoQ. It was observed that 2 BHK homes in Western Suburbs continued to be buyers’ favourite in Mumbai.
- Ahmedabad-Under-construction segment remained favoured by buyers: The city benefited from being one of the cheapest markets for residential real estate in India, as COVID-led social distancing requirements made people to look for either bigger homes or second homes in the outskirts. Sustained by commercial segments and new launches, western and north-western parts of the city continued to do well in Q4 2020. At more than 1%, the city posted the highest price increment amongst the TIER I cities in the country for Q4, bringing down the YoY decline to -1.5% in 2020.
Real Estate is now well placed to play a key role in the overall recovery of the economy, with investors coming back to the market, rise of tier 2-3 markets and the much needed stimuli provided.