Residential Real Estate Saw Slight Uptick In Q3 2020: JLL Report

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housing

The pandemic proved to be a major setback for the housing market. Sales of residential units plummeted in Q2 2020, with prospective buyers postponing their purchase decisions.

While is is still a long way to go, it seems from residential JLL’s Q3 2020 reports that the worst is behind us as some initial signs of revival are visible on the horizon. All thanks to combined effect of low mortgage rates, stable prices and flexible payment plans of developers, it seems to be an appropriate time for fence sitters to enter the market and strike a lucrative deal.

The Government and the Central Bank have also played their roles. Central Bank’s move to allow one-time restructuring of personal loans (including home loans) was a long awaited one and aided in improving consumer sentiment. Additionally, the Maharashtra Government reduced stamp duty rates from 5% to 2-3%, effective 1st September 2020. If other state government’s follow suit, this can go a long way in speeding up the revival of residential real estate in India.

Initial signs of revival seen in the market are sales increasing by 34% in Q3 2020 as compared to Q2 2020 as per the JLL’ Q3 2020 market report. The slight increase is also a mixed sign because a major portion of Q2 2020 was gone into the nationwide lockdown during which there was absolutely no activity. Plus the slight increase in activity in Q3 2020 might just be pent-up demand. Also the sales in Q3 2020 is still way lesser than that happened in Q1 2020.

However, if in the subsequent quarters, the continuation of the momentum in sales continues hinging on enhanced consumer confidence the residential real estate market might expect some revival. It also depends upon the continued implementation of progressive government policies amidst the gradual revival of the Indian economy at large. The ease of lockdown restrictions and the upcoming festive season might further aid in bringing buyers back to the market.

Since there was a sharp dip in launches as well, unsold inventory at various stages of construction across the seven markets under consideration has decreased marginally from 459,378 units to 457,427 units.

An assessment of years to sell reveals that the expected time to liquidate this stock has increased from 3.6 years in Q2 2020 to 4 years in Q3 2020 because of a slowdown in average sales velocity.

In the backdrop of structural issues like job security and fall in income levels, the slight uptick in sales is a significant achievement. Click here to download JLL’S Residential Market Update: Q3 2020

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