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The recovery of the Indian real estate sector is prominent, with the sentiment scores reaching a year-high in the last quarter of the year. The third quarter of the year had recorded a sentiment score of 40, which jumped to 54 in the fourth quarter. It might be noted that this is the first time in 2020 that the real estate sentiments entered the optimistic zone. Especially after the pandemic broke out, the score turned negative and remained in the pessimistic zone for the first three quarters of the year. In the sentiment scoring system, scores below 50 are considered to be pessimistic while those above 50 are considered to be optimistic, with 50 being neutral.
Several factors led to the sudden rise of the sentiment score in the real estate sector. The demand for residential properties had pent up in the real estate market during the pandemic. When the lockdown got eased and property sales resumed, a large section of the buyers turned out to be first-time homebuyers who had previously been living in rental accommodations. The pandemic amplified the need for one’s own home and reminded people about shelter being a basic necessity.
The sales had started to revive in the third quarter itself, but due to a number of other reasons, it is the fourth quarter that recorded the optimistic sentiments. The festive season is considered by many to be an auspicious time to move into a new home and this helped to boost housing sales. Moreover, it gave the developers the opportunity to come up with a plethora of special offers for their properties.
The government took up several measures as well. For instance, stamp duty was slashed by three percent in Mumbai. This not only helped the homebuyers to save money, but also gave the fence-sitters the opportunity they had been waiting for. The repo rates were reduced to the lowest in a long time by the RBI, thus making home loans much cheaper due to lower interests.
In response to a survey carried out by Knight Frank India in the third quarter of 2020, 57% of the respondents opined that the Indian economy would witness growth in the upcoming six months. This percentage jumped to 82% when the same survey was carried out again in the fourth quarter. The number of survey respondents with the view that the residential sales would grow in the next six months increased from 66% to 70% as well. Evidently, a large section of the respondents who were unsure about the revival of the real estate sector and the economy are starting to change their mind. It is expected that the real estate sector would continue to revive at a healthy rate and drive the regrowth of the Indian economy.
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