Opening of the economy, resumption of construction, and new launches have led to a supply boost in Bengaluru in the form of new housing units, resulting in a 6.9% quarter-on-quarter increase in the first quarter of 2021, latest study by property selling and buying platform Magicbricks showed.
The Magicbricks PropIndex report highlighted that most of this new supply is concentrated in the city’s eastern and southern outskirts.
Both the under-construction and ready-to-move property segments saw positive price changes, but the under-construction segment saw greater gains in the first quarter of 2021.
The dynamics of the Bengaluru residential market were bolstered by factors like improved affordability resulting from lower home loan rates and various developer-led initiatives like cash deals, discounts, and deferred payment plans, the report noted.
Reflecting the dominance of mid and upper-mid segment buyers in the city 2 and 3 BHKs account for 90% of the demand and 92% of the supply in first quarter of 2021.
Despite a heightened preference for multi-storey apartments in the past, buyers are now searching for larger homes within their budget, which is driving up demand for residential plots and villas in the outskirts of the city, according to the report.
Puravankara Ltd entered the plotted construction sector to leverage this demand and is planning to launch a 5.5 million sq.ft. of plotted development in Bengaluru and other south Indian cities. Whitefield, Sarjapur Road, and Bellary Road consistently ranked high in terms of searches as well as active listings, the report said.
“The first quarter of the year 2021 has indicated a strong revival in the economy… After the festive season euphoria, we saw rationalisation of the surge in traffic volumes in some cities in Q1 2021,” Magicbricks Chief Executive Officer Sudhir Pal said.
Pal said that various confidence-building measures by the central government such as liquidity infusion in stressed projects through the SWAMIH fund and RERA extensions have supported the sector when most needed.
Also reduced home loan interest rates along with cuts in stamp duties in some states have improved the demand, Pal said.
“We foresee the momentum gained in the last six months to continue across both supply and demand, backed by new launches tailored to the emergent needs of consumers and all-time low interest rates,” Pal added.
The report states that the ready-to-move segment, in Bengaluru, posted a marginal quarter-on-quarter growth of 0.7% but still declined on an year-on-year basis at 3.3%.
Due to revived confidence, the under-construction properties witnessed an increase in prices by 1.3% quarter-on-quarter. Although, both under-construction and ready-to-move witnessed price increments across all price segments, the report said.
Properties costing more than 7,000 rupeer per sq.ft. occupied a significant share of 36% in the demand pie, which increased from 32% in the previous quarter.
The demand for mid-sized homes has propelled the share of 2 BHK configurations even as the share of 3 BHKs has come down by 5% of the overall pie over the last quarter, the report noted.