Sales of residential real estate units increased by around 67 per cent to 99,416 residential units in the first half of 2021 across the top eight markets in the country despite the second wave of Covid-19 and ensuing restrictions, according to the latest market assessment report by Knight Frank India.

The number of new launches in the same period was 103,238 units, says the “India Real Estate – Residential, January-June 2021” report.

“As sales volumes stabilised, especially in the early part of H1 2021, unsold inventory reduced by 1 per cent over the same period last year. Prices remained mostly contained with a reduction of -1 per cent to -2 per cent Year on Year (YoY),” the report added.

The study also highlighted that the impact of the second wave of the pandemic was much less severe on residential real estate than the first wave despite a significantly higher health impact.

Shishir Baijal, Chairman, Knight Frank India said, “The gradual resumption of economic activity and increasing availability of the vaccine had sparked market traction in the second half of 2020 and this momentum carried over into Q1 2021. The second wave of Covid-19 has impeded this momentum but should be seen as more of a speed-bump as YoY growth in market volumes remains strong in half-yearly and quarterly terms in the January to June 2021 period. The limited period stamp duty cut which spiked home sales in Mumbai and Pune adequately demonstrates the need for policy level intervention to revive the residential market. Going by the tremendous success of the stamp duty cut in Maharashtra, other states may also consider similar demand stimuli at appropriate times that will not only help sales velocity but also propel economic activity.”

Also, during the early part of this year, sales volumes were greatly influenced by two markets – Mumbai and Pune, that together constituted over 45 per cent of the total sales amongst key markets. These two markets were given their “orbital velocity” by the Maharashtra government’s decision to lower stamp duty rates for a limited period, it said.

While residential sales started to show a resurgence, the momentum got impacted by the second wave of the pandemic starting towards the end of March 2021. Interestingly, the period of the second wave coincided with that of the first wave last year which had brought the residential sales market to a screeching halt. Fortunately, the second wave, despite its extremely morbid potency, was less severe on the residential real estate market.

A clear outcome of the pandemic was seen in the share of mid-range and high-end property segments. The share of sales of homes costing less than Rs 50 lakh was reduced by around 5 per cent and constituted 42 per cent of all sales in the January-June 2021 period. Homes costing over Rs 1 crore constituted about 19 per cent of all sales, while units at Rs 50 lakh to Rs 1 crore improved by approximately 4 per cent to 39 per cent.

“The reducing proportion of affordable homes (less than Rs 50 lakh) is directly related to the challenges thrown up by the pandemic which reduced the economic confidence of home buyers in that category due to the threat of job loss, reduced income, inching CPI and other challenges,” Knight Frank India said.

New launches in H1 2021 were higher by 71 per cent YoY and were led by the two markets of Mumbai and Pune in Maharashtra. All markets saw launches increase significantly as developers took measures to capitalise on the strength of demand. A majority of the new launches were recorded in the first quarter of the year, while the impact of the second wave in the second quarter of 2021 was felt in equal proportion by developers which impacted launches as well. Q2 2021 accounted for a little more than one-fourth of all launches in the first half of 2021.

However, a comparison with the pandemic affected quarter from a year ago shows that Q2 2021 has recorded a YoY growth of 388 per cent over Q2 2020.