Unlock 1.0: The reasons That Make Homebuyers Wait And Watch

The real estate sector, which was already going through a slowdown over the past few years with poor sales and high levels of inventory, is unlikely to see much action, as we head towards the opening up of the lockdown in a phased manner.

The sentiment has further soured on account of the poor economic activity due to the lockdown, which has resulted in pay cuts and job losses across sectors.

“People are likely to follow a wait and watch policy for at least the next month. The covid-19 cases are going up and people are likely to be cautious despite the restrictions lifting up,” said Dhruv Agarwala, Group CEO, Housing.com, PropTiger.com, Makaan.com and Fastfox.com.

Although on our website we have seen the enquires go up to around 93% of the pre-covid-19 levels, I don’t think we are going to see many transactions at least for the next six-nine months, Agarwala added.

Pankaj Kapoor, managing director of Liases Foras, a Mumbai-based real estate research firm, agreed that people are likely to wait and watch before making the purchase.

“The sentiment has been hit hard. The gap between the purchasing power and affordability has again gone up due to the job losses and pay cuts. Therefore, until and unless homebuyers see good offers with discounts, they are unlikely to come forward,” said Kapoor.

“I think we can expect some activity post-September during the festive season when the developers generally come out with offers and things are likely to stabilize a bit,” added Kapoor.

People are likely to go for ready-to-move-in houses or make purchases in the secondary markets as they will be watchful of the execution risk in the under-construction projects.

The construction activities have come to a standstill as most of the migrant laborers have gone back to their native places. Even if the lockdown opens up, it will be difficult to resume the construction work. This will mean a delay in the completion of under-construction projects and homebuyers who have bought under-construction projects will have to wait longer.

“Construction activity is likely to pick up only after the monsoon, as this is generally a lean period for construction activities and workers who have gone back will take some time to come back,” said Agarwala.

“Only a few builders who have a limited number of workers will be able to resume work. Around 50-60% work is unlikely to resume,” said Kapoor.

The government has already extended the deadline for registration and completion of projects under Rera by six months. This is for projects, whose deadline is expiring on or after 25 March 2020.

(Source: Livemint)