Builders in Mohali were desperately waiting for a miracle earlier this year after a decade-long slowdown, hoping for some improvement in the realty market. But that was before the Covid-19 outbreak.
With more than two months under lockdown, medical and economic uncertainty overshadowing every aspect of life, buying a house now is not on people’s priority list.
This is why demand has hit a new low with property prices dipping by at least 10% from the beginning of the year, says Tejinder Singh Punia, former president, Mohali Property Consultant Association.
Mohali, particularly its peripheral areas of Zirakpur, Kharar, and New Chandigarh (Mullanpur), has been the tricity’s development hub in the recent past. Since last year, with Greater Mohali Area Development Authority (GMADA) led IT City and Aero City projects, Airport Road too was coming up as a prominent realty destination.
PANDEMIC BLUES
“People have lost their jobs, the education sector has closed down and the hospitality sector has been hit badly. People don’t have the money to invest in property. Only those who were already in the market before pandemic hit have become active again,” says Punia.
“The Covid-19 pandemic has hit the homebuyer’s capacity to buy. With no income inflow, the outbreak has also severely restricted builders’ ability to create new supply. Completion of older projects, for many, will be tough now,” says LC Mittal, director, Motia Group.
{{/usCountry}}“The Covid-19 pandemic has hit the homebuyer’s capacity to buy. With no income inflow, the outbreak has also severely restricted builders’ ability to create new supply. Completion of older projects, for many, will be tough now,” says LC Mittal, director, Motia Group.
{{/usCountry}}No action is likely this year, in stark contrast to a slew of projects launched last year. “Builders will focus on delivery as ready-to-move products become more important. In fact, in the next couple of years, we don’t estimate many new project launches,” says Amit Mittal, director, Green Lotus Group.
Liquidity crunch, rising costs of construction material and exodus of migrant workers from the state are contracting supply creation. “Builders have lost 50% to 100% of their migrant workers since inter-state transport was allowed. Even though labourers want to come back now, it will take some time before construction schedules normalise,” says Amit.
In a district where housing project delays are endemic, buyers don’t expect delivery anytime soon. “Even before the pandemic, it was taking time for possession of plots, now builders can justify the delay because of Covid-19,” says a homebuyer in a New Chandigarh based housing project, requesting anonymity.
Also, with restrictions on inter-state movement yet to be completely lifted, people from other states are unable to come in from neighbouring states, especially Himachal Pradesh, which has the largest chunk of buyers in New Chandigarh and Zirakpur areas.
CAUTIOUS OPTIMISM
Builders, however, are optimistic of a quick turnaround as home loan interests are at their lowest in nearly two decades. They foresee a move from rentals to house ownership fuelling the demand.
The phased lockdown relaxations and Unlock-1 measures have opened up the sector for business. “Buyer queries are coming in. End-users are now looking for only ready-to-move property. There are no investors,” says Bhupinder Singh Sabharwal, president, Mohali Property Consultant Association.
In the pre-covid-19 period, banks were offering home loans at more than 8%. “Now the rates have dipped below 7%. Interest rates are expected to fall further, making it cheaper to buy a house. For people living in rented homes in Chandigarh and Panchkula it will make better financial sense to pay home loan EMIs instead of monthly rentals. Builders with ready-to-move properties stand to gain the most,” says Prateek Mittal, executive director, Sushma Group.
The uncertainty created because of pandemic will push people, especially with many people working from home now, to opt for house ownership over rented houses, he adds.
Tanu Kashyap, chief administrator, GMADA, is also determined to promote activity in the sector. “After the Covid-19 pandemic and lockdown, we are taking very considerate view of requests from different industry stakeholders. The Punjab government has already announced a slew of concessions and incentives for the industry. Similarly, more regulatory and policy changes are in the works, and will be announced in due time. GMADA will also be offering properties in the near future to promote business activity in the sector.”
NOT BUSINESS AS USUAL
Property viewing is also changing. For instance, builders are allowing buyer visits to offices and project sites through appointments. “Walk-in buyers are allowed, but they have to wait longer now with social distancing norms allowing only a limited number of people to assemble in office,” says Amit.
The need for spacious houses, and self-dependency in the wake of Covid-19, is also pushing demand in new segments. “Significantly, we are receiving increasing queries for land purchase for building farmhouses, which can allow organic farming too. Land prices have already fallen by at least 20%,”says Punia.