Will property prices crash in India due to the Coronavirus outbreak?
Housing affordability in India has increased in the aftermath of the Coronavirus pandemic. An indicator of this can be seen on Knight Frank’s housing prices index. The country ranks 54th out of 55 countries globally in property prices, as rates of residential properties fell marginally by 0.5% year-on-year during May-June 2021. With 29.2% appreciation of housing prices, Turkey led the annual rankings while New Zealand stood at the second position with a 25.9% price rise. The US ranks third on the index with 18.6% price appreciation.
Will the housing market crash?
While the popular belief was that property market in India would crash due to the tremendously adverse impact of the many waves of the coronavirus pandemic, those predictions now assume the status of simple, wishful thinking. Data show so. While there is no denying that housing affordability in India has improved remarkably since the onset of the pandemic in March 2o20, the price correction in India’s real estate sector can hardly be termed a crash. Numbers are quite telling here.
Will property prices fall further in 2021?
While further depreciation in property prices cannot be ruled out, sector experts are of the view that rates might start firming up, once the dull economic situation caused by the second wave of the Coronavirus pandemic improves, signs of which are already visible. Even though economic growth is likely to remain subdued in the first half of 2021, it might bounce back in the second half, provided the impact of the upcoming third wave of the pandemic is mild.
Even though the impact of the Coronavirus-induced economic troubles on property values in India’s mega cities may have been limited, the second wave of COVID-19 pandemic is likely to cause a much deeper overall impact, the positive outlook by industry bodies notwithstanding.
According to a Reuters poll unveiled on May 21, 2021, the devastating impact of the second COVID-19 wave in Asia’s third-largest economy, will stagnate price growth by crushing demand and offsetting the benefits to real estate developers offered by the government in the form of subsidies and incentives. During a poll in January 2021, analysts predicted a 1.3% average growth in property prices.