Sales of sub-Rs 50 lakh homes hit in 2021 as Covid bites: Knight Frank

Sales of homes priced less than Rs 50 lakh took a beating in the first half of 2021 as the country grappled with the Covid pandemic and potential buyers suffered loss of income, suggests the latest market assessment report ‘India Real Estate– Residential, January-June 2021’ by Knight Frank India. 

“The share of sales of homes costing less than Rs 50 lakhs in the overall sales of residential units reduced by around 500 basis points (bps) and constituted 42 per cent of all sales in the January-June 2021 period as compared to 47 per cent in the same period in 2020. Homes costing over Rs 1 crore constituted about 19 per cent of all sales, while units at Rs 50 lakhs to 1 crore improved by approximately 400 bps to 39 per cent,” the report said.

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The reducing proportion of affordable homes, according to the Knight Frank report, is directly related to the challenges thrown up by the pandemic, which reduced the economic confidence of home buyers in that category due to the threat of job loss, reduced income, inching consumer price inflation (CPI) and other challenges.

On an overall basis, however, sales of residential units across eight key metros – Mumbai, Pune, Bengaluru, Hyderabad, National Capital Region (NCR), Chennai, Kolkata and Ahmedabad – surged between 22 per cent and 150 per cent year-on-year (YoY) during this period. At the all-India level, at 99,416, the number of residential units sold between January – June 2021 was 67 per cent higher YoY.

“The last four quarters marked by the pandemic have given rise to different sets of considerations for home buyers. Barring the affordable segment that was impacted by the uncertainties arising from the economic disruptions of the pandemic, the strength of the market was adequately demonstrated. We expect the residential segment to remain buoyant due to the attitudinal shift in mindsets of potential buyers and as and when normality returns, we expect the sales volumes to pick up pace,” said Shishir Baijal, chairman and managing director at Knight Frank India.

Residential sales

During the early part of this year, sales volumes were greatly influenced by two markets – Mumbai and Pune that together constituted over 45 per cent of the total sales amongst key markets, the Knight Frank report suggests. These two markets, Knight Frank said, were given their orbital velocity by the Maharashtra government’s decision to lower stamp duty rates for a limited period.

The increase in sales activity stemmed the fall in residential prices seen in 2020. Price levels in four of the eight markets were observed to remain at the same level, or grow marginally YoY in H1-2021.

“While developers offered flexible payment schemes to push sales across markets, the incidence of direct discounts was markedly lower during H1-2021,” the Knight Frank report said.

On the other hand, new launches in the residential segment in H1-2021 were 71 per cent higher YoY and were not surprisingly led by the two markets of Mumbai and Pune in Maharashtra. 

“All markets saw launches increase significantly, as developers took measures to capitalize on the strength of demand. Q2-2021 accounted for a little over one quarter of all launches in the first half of 2021. However, a comparison with the pandemic affected quarter from a year ago shows that Q2-2021 has recorded a YoY growth of 388% over Q2-2020," the Knight Frank report said.