Price cut, low mortgage rate not enough to boost housing demand; eco revival, job security key

NEW DELHI: Housing demand will see an uptick once revival of Indian economy starts and prospective home buyers feel secure about their jobs, property consultant JLL India on Wednesday said.
The consultant said that reduction in housing prices, lower home loan interest rates and attractive payment plan might not be sufficient to revive demand, which has been badly hit because of COVID-19

“Today, end users drive the housing market. And, for end users, real estate is an emotive yet thoughtful purchase, with significant financial outlays. Their home buying decision revolves around financial security and confidence in the future.
“Sales of residential units are expected to witness an uptick once the revival of the economy starts and prospective buyers feel secure about their jobs,” JLL India said in its survey report to gauge homebuyers preference.

The survey conducted in June-July saw participation from 2,500 respondents across Mumbai, Delhi-NCR, Bengaluru, Pune, Chennai and Hyderabad.
As per the finding of the JLL India survey, job insecurity has been cited as the biggest concern by homebuyers, while drop in property prices tops their wish list.
The consultant said the revival of sales will have to be the focus in order to facilitate the recovery of the housing market.
“This can be achieved by either reducing property prices, offering attractive payment plans or schemes, bringing down mortgage rates or relaxing government taxes and duties,” the report said.
Once the lockdowns are lifted, homebuyers are expected to return to market if they find prices being cut in accordance with their expectations, it said.
Currently, the market has a lot of unsold inventory in various stages of construction and consumers expect developers to cut prices in order to get rid of the piled up inventory, the survey said.
However, JLL India said that there are little scope for price reduction.
“Property values in a majority of India’s prime residential markets have remained more or less stagnant in the past few years. Developers are operating with very low margins and the chances of further reduction in prices are very remote, particularly in the affordable and mid-priced segments,” the consultant said.
Nevertheless, a few developers in certain markets are providing moderate price discounts to facilitate cash flows in the short run.
However, JLL India feel that price cuts, low mortgage rates and attractive payment plans are necessary but might not be sufficient to revive sales in the housing market.
Among other findings, 91 per cent respondents wanted to buy a home when asked to choose between buying and renting. Additionally, 67 per cent believed that buying a home is a necessity and not a luxury.
In the organised housing brokerage business, Anarock, PropTiger, Square Yards, Investors Clinic, 360 Realtors, India Sotheby’s International Realty, Quikr Realty, Xanadu Realty and The Guardians Real Estate Advisory are major players.
International property consultants (IPCs) like JLL, CBRE, Knight Frank, Cushman & Wakefield, Savills, Colliers and Vestian focus more on leasing of retails and office spaces.