Economic Survey: PMAY in slow lane, home transactions on recovery path, even as prices remain firm

India’s flagship housing scheme, the Pradhan Mantri Awas Yojana (PMAY), is in the slow lane in FY22 with just 4.49 lakh homes completed till December 2021, as against 14.56 lakh ones being completed for full of FY21, the Economic Survey 2021-22 has revealed.

Interestingly, the slowdown in home sales for the economically weaker sections of the society – the segment catered to by PMAY (Urban) — happened when transactions in housing properties, across key cities of the country recovered or “increased significantly” post the second wave of infections. Recovery came after home deals suffered during the first wave. These Covid-led hiccups notwithstanding, home prices have remained firm in most cases and are witnessing an increase in some cities.

“With the loss of income, uncertainty about future income, and stay at home orders, home buyers delayed their housing purchases,” it said in the initial phase of the pandemic (during the first wave). After the initial Covid-induced restrictions were removed, transactions in housing properties “increased significantly”, because of pent up demand and improvement in affordability (because of measures taken by government during the pandemic, such as lower interest rates, reduction in circle rates, and cut in stamp duties, so on.

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Between the two Covid waves, from June 2020 to April 2021, housing transactions recovered swiftly, as quarterly purchases crossed even the pre-pandemic levels for all the selected cities, it said.

Interestingly, Motilal Oswal Financial Services in a recent report has shown the cumulative revenue collection from stamp duty and registration charges for all States in India was recorded at ₹1,00,100 crore for the first 8 months of FY22 (April-November 2021). The average monthly collection was at ₹12,500 crore in the first eight months of FY22; higher than the ₹10,600 crore in the year-ago-period.

Lesser Impact of Second Wave

Decline in housing transactions have been much less during the second wave. While during first wave housing transactions declined in almost all cities; the trend post the second wave shows housing transactions in many cities such as Mumbai, Thane, Pune, Noida, Hyderabad, and Bengaluru “increased relative to the pre-pandemic levels”. These cities saw quarterly home sales better than pre-pandemic levels.

In cities such as Gandhinagar, Ahmedabad, Chennai, Ranchi, Delhi and Kolkata, the housing transactions declined during the second wave. “However, this decline has been much less than the decline during the first wave,” the Economic Survey said.

Number of unsold units (residential) have also come down post the second wave.

Impact on Home Prices

The impact of the pandemic on the prices of residential properties was not uniform across cities. Many cities tracked in the Economic Survey saw home prices increase, post the second wave.

For instance, during the first wave, the housing prices increased in cities such as Gandhinagar, Ahmedabad, Hyderabad, Thane, Mumbai, Kolkata, Pune and Bengaluru, while they declined in Delhi, Noida and Ranchi. Similar trends were also visible during the second wave. Home prices in Ahmedabad, Hyderabad, Gandhinagar and Ranchi continued to increase.

Rural Housing

In the PMAY-Gramin (or the rural leg of the PMAY scheme), as many as 2.17 crore homes have been sanctioned till January 22, and 1.69 crore houses completed against a target of 2.63 crore houses till 2021-22.

As on January 18, 2022, the States/UTs have identified 4,46,058 landless beneficiaries in the Permanent Wait List of PMAY-G, out of which 2,05,847 (46 per cent) have been provided with land by the concerned States and Union Territories, the Economic Survey said.