Experts say low interest rates on home loans, need for space during COVID have driven the surge.
A report by property consultant Knight Frank Indiashows that the sales of residential houses in Bangalore grew by 131% in July-September 2021 compared to the corresponding months of 2020.
Around 11000 units were sold in the city in the last 3 months compared to about 5000 units between July-September 2020.
For many homeowners, the process of moving on from a rented apartment to buying a house hasn’t been easy.
“At the beginning of the pandemic, I lost my job. Then I started to do things on my own in the real estate sector itself. I had some savings and had put it into the work. Within a year or so, I was in a position where I could think I can buy a house,” said Vikram Baala, a homeowner.
The real estate market took a big blow in 2020 during the pandemic with sales getting adversely affected due to job losses. 8693 units were sold in Q1, 3484 in Q2, 4913 in Q3 and 6490 in Q4.
2021 began on a good note for the industry as sales picked up thanks to minimal COVID related restrictions as 10,219 units were sold in the city. The second wave, in the next quarter, hit the industry hard as the number of units sold fell to 4593.The market bounced back strongly in Q3 as 11337 units were sold. Notably, in the last six months of 2019, about 8000 more houses were sold than in the current quarter.
Brokers say that the pandemic has also led to people upgrading to bigger houses due to the fear of COVID and that low interest rates on home loans have helped the buyers’ cause.
“During lockdown, many people have realized that family is more important, space is more important. That has made them upgrade to a bigger property. Secondly, interest rates on bank loans are very low today. So if a buyer is looking to a buy a house, this is the correct time for them to begin their search” said Sunil Singh, Director at Realty Corp.
According to reports, home loan interest rates offered by many banks is at an all-time low in the 6-6.5% per annum range.
Meanwhile, the Builders Association has cautioned that losses borne by builders during COVID in expenses like steel and cement may trigger a price hike for consumers.
“My only fear is in future, because of the losses incurred on the expenses that couldn’t be avoided, there might be some pressure in the prices of real estate.” said Abdul Sattar, Secretary of the Builders Association of Karnataka.
Experts say it’s the mid-segment and luxury homes in Bangalore that are driving most of the sales with higher income groups readily investing in the sector.
“People who had the biggest shock due to COVID have been the informal sector, people running small businesses. Those weren’t the primary drivers for housing anyway. For the higher income groups, the shock can be absorbed since they have sufficient money. For them, they are not going to change their investment options dramatically” said Venkatesh Panchapagesan, Chairperson, Real Estate Research Initiative at IIM Bangalore.
