The Indian real estate industry is amongst the fastest growing in the world. Owing to its swelling population, the country has developed innovative ways to provide housing opportunities for as many as possible. The government also launched affordable housing schemes intending to make housing accessible for all.
However, the hopes for growth in the real estate sector were tarnished by the sudden onset of the COVID-19 pandemic. The coronavirus led to a complete shutdown of the economy and almost a year later, recovery is still underway.
Moreover, the financial setback deterred people from taking home loans with as much proclivity as earlier. Needless to say, the Indian real estate industry has suffered a substantial loss in 2020.
Here are some of the major economic events of 2020 that defined the realty sector.
Homebuyers defer property purchase
The Indian housing sector had been facing a slowdown even before the COVID-19 pandemic struck. However, the government has introduced lower home loan interest rates (below 7%) and high tax rebates up to Rs. 3.50 lakhs per annum to counter this.
Impact on the supply side
Not just prospective homebuyers, but builders also encountered challenges during the peak of the pandemic. Due to the lockdown, transportation services were closed, which stalled housing projects. Moreover, the construction workers returned to their hometowns, leading to a lack of workforce in urban areas which further delayed construction.
Historic fall in India’s GDP
The Indian economy contracted by a staggering 23.9% in the first quarter of 2020, the lowest it has ever been in years. This indirectly signalled that the real estate sector would face a fall in both demand and supply. Homeowners also faced sudden unemployment due to companies’ COVID-related cost-cutting, which further led to them falling behind on home loan EMI payments.
Government interventions in affordable housing
Nevertheless, the government has been resilient in combating the shrinkage of the real estate sector and has eased the home loan eligibility. The Ministry of Housing and Urban Affairs (MoHUA) launched a portal for affordable rental housing. The Securities and Exchange Board of India (SEBI) also approved the REIT platform, which will usher in investments up to Rs. 1.25 trillion.
With the COVID-19 vaccine on the way, it seems that the worst has been dealt with. The real estate sector has put its gears in motion to get back on its feet. Before investing, make sure to weigh your options and use a home loan EMI calculator before finalising your decision.