Festive hopes: Housing sector upbeat on govt reforms

For homebuyers, this period is both auspicious and opportune to buy homes because real estate developers inevitably roll out attractive incentives – either in the form of price reductions, money-saving opportunities like waived stamp duty and registration charges, or ‘white goods’ like furnishing and household electronics to attract genuine buyers.

This year, the government has already done a lot of the heavy lifting when it comes to sweetening the deal for homebuyers. The slew of measures announced over the past two weeks, primarily to boost consumption, have both direct and indirect benefits for homebuyers and have already set the stage for the last quarter of the calendar year to witness increased housing sales. These measures alone will result in housing sales increasing by around 5-7% in Q4 2019.

According to Anuj Puri, chairman, Anarock Property Consultants, so far, the policy-induced impetus will primarily attract end-users--buyers looking to purchase homes for their personal use. “However, it is no secret that end-user sales alone will not suffice to revive an industry which has historically depended on healthy investor activity to drive sales momentum. The government is expected to come up with additional exclusive measures for the real estate sector, expected anytime soon, then it could boost the confidence of investors too,” he added.

Traditionally, the festive quarter fares better than the previous quarters of the year when it comes to housing sales; the combination of religious sentiment and festive deals and freebies is a potent mix during this part of the year.

Puri said, “For instance, Q4 2015saw 70,000 homes sold in the seven major cities.

However, as tempting as it was for developers to believe that this was an unshakeable performance standard, it was certainly shaken just a year later. After demonetisation was announced in this critical quarter in 2016, housing sales halved to 32,100 units.”

 The implementation of RERA in early 2017 set the stage for another about-turn, with the last quarter of 2017 witnessing a 44% surge in housing sales.

This trend was fortified in the festive season quarter of Q4 2018 with 69,900 units sold in this period.

Over the years, the religious aspect of increased home buying sentiment in the festive season has waned to some extent. However, the festive freebies and discounts doled out by developers have lost very little of their intrinsic allure. True, the previously popular subvention schemes have been eliminated by the NHB, but this fact also paves the way for generous festive discounts and add-on attractions.

Puri believes that India is a highly diverse real estate marketplace; consequently, what works in some cities doesn’t necessarily work equally well in others. Each of India’s top real estate markets has its own trends for developers seeking to harness tradition-fuelled homebuyer sentiment: 

Chennai: With unsold housing inventory of 31,470 units valued at Rs 20,430 crore, some builders in Chennai are giving out upfront discounts or offering freebies like gold coins, free furnishing, etc. With prices in this predominantly end-user-driven market remaining attractively affordable, buyers are focusing more on freebies and flexible payment options

Bengaluru: India’s Infotech capital currently sits on 64,680 unsold housing units cumulatively worth Rs 47,780 crore. A unique aspect of Bengaluru’s festive season incentives to homebuyers is that developers offer either up-front cash discounts or flexible payment options. A small handful of projects have direct cash discounts of up to Rs 5 lakh during the festive season.

With the Finance Minister promising immediate measures to benefit homebuyers, Puri believes the real estate sector hopes the imminent and exclusive announcements that will give festive season 2019 the impetus it needs to ramp up sales and fulfil many more dreams of homeownership.