A decrease in the interest rate of home loans has led more people to buy properties. Builders say there is still a long way to go before the real estate market starts to make profits again.
Bangalore- Bangalore saw a rise in the sale of real estate in the first quarter of 2021 as compared to the first nine months of 2020. Vinod Raman, an IT professional, is excited to be an owner of a new home soon. “During the lockdown, I realised I need to upgrade. We were all quarantining together and we didn’t have much space. To bring some ease I am now buying a bigger house it is always good to have one additional room,” he said.
A report by 99acres.com showed a 45 per cent increase in real estate sales from November 2020 to February 2021. The same report shows that the real estate sale had gone down from January to September 2020 by 57 per cent as compared to 2019. Bangalore sales value of 2020 was nearly Rs. 12,000 crore. However, from November 2020 to February 2021, the sale value increased to nearly Rs.18,000 crore. “The interest rates of home loans have also come down, which has made it easier for me to invest in a bigger house now,” Raman added.
The interest rate has come down from nine per cent to six per cent in most banks, as the government is looking to revive the economy after the pandemic.
A report by nobroker.com, a website that surveys real estates, showed that home loans disbursals have risen by 200 per cent. This rise was mainly from December 2020 to February 2021 as compared to January 2020 to September 2020.
Ashish Chaudhury, a banker from the State Bank of India, said that another reason for people buying more houses is the decrease in stamp duty. “The stamp duty has come down. The government has brought down the stamp duty to 6 per cent from 3 per cent in Karnataka, and also all the banks decreased their home loan interest rate,” he said.
Brokers are now getting more enquiry calls as well. “During the lockdown, we got no calls. Now, since October, we get 10 calls every day,” said Sunil Singh, a broker from Realtycorp Pvt. Ltd. Singh also added that there has been an increase of 15 per cent in the sale of farmhouses and big villas. The main reason for this is because people are now preferring a farmhouse stay in the outskirts rather than travelling elsewhere for a vacation. “People are getting houses at a good price. They are some urgent sales that are up for grabs, good projects available. Interest rates are down, I think the best time to buy property is now,” Singh said.
The Builders Association of Karnatakasaid that while the real estate sales have increased, there are still nearly 40,000 units of property that are unsold in Bangalore. He said that one way to further help in the sales of real estate is if the government gives more incentive to the builders as well so that they can further reduce the prices and attract more buyers.
They need to intervene there as well to help the market. One way the government can help us is by regulating the prices of steel and cement because otherwise they fluctuate leading to issues in planning the budget.
The experts are hopeful that a little more help from the government will help them to recover the real estate to the pre-COVID levels. However, they are also worried that the second wave of COVID might hamper the market again.