While house deals suffered major decline during the pandemic, the housing prices did not fall in most cities. In fact, some of the select cities recorded a rise, the Economic Survey 22 has observed.
During first COVID-19 wave, housing transactions declined in almost all cities reviewed. The second wave, however, saw house deals in cities such as Mumbai, Thane, Pune, Noida, Hyderabad and Bengaluru rising to the pre-pandemic levels, it noted.
It can be broadly observed that the response of housing transactions to the COVID-19 shock is far greater than the response of housing prices. This implies that shocks to the housing sector adjust more through changes in transactions than prices, it said.
For analysing the impact of the first and the second waves on the housing transactions and prices across a sample of 12 cities, it used data by the National Housing Bank (NHB) Residex that tracks the movement of prices of residential properties in select cities on a quarterly basis.
As price response remains relatively lower than the response of transactions, transactions are better indicators to gauge sentiments in the housing market, it noted.
The decline in housing transactions have also been much less during the second COVID wave than the decline during first wave, it said.
In cities such as Gandhinagar, Ahmedabad, Chennai, Ranchi, Delhi and Kolkata, the housing transactions declined during second COVID-19 wave over the pre-pandemic levels, though this was much less than that was seen in the first wave.
Unlike the decline in quarterly housing transactions during first and the second waves, the impact of the COVID-19 shock on the prices of residential properties were not uniform across cities.
During the first COVID wave, the housing prices increased in cities such as Gandhinagar, Ahmedabad, Hyderabad, Thane, Mumbai, Kolkata, Pune and Bengaluru over the pre-pandemic level, and the housing prices decreased in Delhi, Noida and Ranchi.
Similar trends were also visible during the second COVID-19 wave over the pre-pandemic level, it noted.
The housing prices in cities such as Ahmedabad, Hyderabad, Gandhinagar and Ranchi continued to increase, despite the COVID-19 shocks, it noted.
Between two COVID-19 waves, from June 2020 to April 2021, housing transactions recovered swiftly, as quarterly purchases crossed even the pre-pandemic levels for all the select cities.
This boost in housing demand is possibly because of pent-up demand and measures taken by the government to increase affordability. The number of unsold residential units have also seen significant drops during the second wave of the pandemic, it said.
"The year 2019 had seen some revival in housing sales. However, during the first wave of COVID-19, housing sales came to a standstill due to the lockdown. After the first wave, housing demand started reviving led by pent-up demand and stable prices. While the headline prices have been stable, developers have been largely flexible to needs of buyer and sweetened deals during negotiations through lower prices, freebies. This attracted many prospective homebuyers who were on the fence regarding making a purchasing decision," said Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers.
During the first wave in 2020, there was a near-complete shutdown of economic activities for a period and hence residential sales hit their rock bottom across cities. However, in spite of the fact that the second wave in early 2021 was more impactful on human health, the economic activities didn't come to a standstill and so were the residential markets, said Samantak Das, chief economist and head of research, JLL India.
"As a result, sales transactions improved quite significantly after a temporary blip. In fact, sales during October to December quarter 2021 was the highest during the last eight years. We believe there would be a strong growth trajectory in housing sales going forward. As far as prices are concerned, they remained range-bound during the last 4-5 years and buyers have got the benefit of time correction," he said.
According to the Survey, Gandhinagar saw housing prices increase by 18.3 percent during the first wave (April-June 2020) and 25.8 percent during the second wave (April-June 2021). In Ahmedabad, the prices increased by 16.5 percent and by 28.9 percent in the same periods. In Mumbai, property prices increased by 6.7 percent during the first wave but there was no change after the second wave.
Finance Minister Nirmala Sitharaman on January 31 presented the Economic Survey that details the state of the economy ahead of the government's Budget for the fiscal year beginning April 1, 2022.
The Economic Survey 2021-22 on January 31 noted that India will grow 8-8.5 per cent in 2022-23, the Economic Survey said in a guarded prognosis on January 31, with the economy poised to dash onto a faster lane, decisively leaving behind the coronavirus-inflicted devastation.