No Reduction in Prices – Post Pandemic

Quavering News

Good News! But what is the news? Drop-in prices of property seem to be good news. It may cherish the buyer but at the same time may bring a loss to the developer or the seller.

As we all have tasted the lashes of Covid 19 in one form or the other, we cannot deny that it had not touched us. The pandemic has eventually gripped the entire world into its clutches and real estate was no exception. The developer community was in a lather when it got the news that builders can sell the housing projects at reduced rates and let go of the high-priced unsold stock. The sector has either to sell off at whatever price they get or hold on to the projects till the situation brightens up. It was a tough decision. But the sector decided to hold. They knew that there will be no reduction in prices post pandemic due to a few reasons as mentioned below:

1. Importance of Homes

After the pandemic, homes took up a new position and importance. Homes have proved to be the safest refuge during the pandemic. A few factors which may gain prominence after the Covid 19 need to be highlighted:

1. a) Spacious homes as they have to perform many functions
2. b) Spacious homes to maintain social distancing
3. c) Affordable prices
4. d) Health facility in close proximity
5. e) Improved infrastructure to work from home
6. Increase in Cost of Raw Materials

As the supply chain is hampered, project delays are expected to prolong. Arrangement of an alternative new supply chain from our country demands time and increased prices. This change will not only delay the projects but also increase the overall cost of the project. Hence there is no chance of reduction in a prices-post pandemic.

1. Pressure on Developers

Developers are guarding the piles of unsold and incomplete inventory. The supply chains need to be transformed. Though a stress fund is sanctioned by the government to complete the projects, it may not cover up all their woes. Considering the depth of the current crisis, prices may not see a downward movement as the holding cost of the developers will climb while the pressure to liquidate the unsold inventory will increase. One cannot think of any reduction in prices -post pandemic. 

1. Low Demand at Present

Due to the pandemic, the home buyers expected a drop in the prices not many would buy a propertyin the present scenario. Despite the fact that the demand is low and there are piles of inventory with the developers, there seems to be no reduction in prices –post-pandemic. 

1. Home Buying Affordable 

 The repo rate that has been reduced to 4 % can make borrowing cheaper for home buyers. This will also support the economy. A moratorium on EMIs will keep the buyers elusive from the market. This will provide some relief to the developers and it will also give a possibility of no reduction in prices -post-pandemic

1. Demand for Homes may Increase

A home is a place that protects you at all times, be it financial, be it emotional, or be it the worst situation like the Covid 19. Home has undergone a change in its functions. Now that it has so many roles, then definitely its demand may increase. With job losses and salary cuts, it had become very difficult to pay the rent during the pandemic. Owning a house has become a dire necessity. With this forecast, there might not be any chance of a reduction in a prices-post pandemic.

In a Nutshell

Real estate is not a perishable commodity. Sellers can postpone the transactions until they get some margin on their property. That is the reason the developers are currently sitting on their inventories and waiting for the conditions to improve. Even though they have to pay tax on these inventories, they prefer to wait for the right opportunity. Hence there doesn’t seem any chance of reduction in prices-post pandemic. Real Estate assets are the safest investments to earn handsome returns. Which investment could be better than real estate! There is no loss, only good returns but with patience.