The recent reports has showed the slowdown in the realty sector. But the realty sector’s ongoing gloom may end soon as New Home Purchase Sentiment Index of ZyFin Research has showed that consumers are willing to purchase homes.
Declining borrowing costs, improving employment outlook and availability of affordable housing projects are encouraging prospective home buyers to purchase a new home in 2015. Regulatory changes like recent Cabinet approval to the Real Estate Bill (Regulation and Development) are expected to boost home buyers’ sentiment further. According to the polled respondents, who represent the Indian mid-income urban consumers, buying a home is gradually becoming more conducive compared to a year back. A large section of the consumers polled felt they expect borrowing costs to decline further making it easier to avail home loans.
The recent rise in sentiment has been captured by ZyFin Research’s New Home Purchase Sentiment Index, which is at its highest level since inception in October 2011. The Index stands at 43.9 in June 2015, a significant recovery from 30.7 in June 2014.
ZyFin Research’s New Home Purchase Index is a monthly barometer of Indian consumers’ willingness to purchase a home within a year. It is based on a monthly poll of 3,000 consumers in 11 cities of different sizes across India.
Giving his views on the ZyFin Research’s New Home Purchase Sentiment Index for June, Mr. Debopam Chaudhuri, Chief Economist, ZyFin Research, said, “Boosting aggregate demand remains the key to help an economy out of a slowdown. The recent steps taken by lending agencies to curtail lending rates taking a cue from RBI’s interest rate outlook would go a long way in convincing consumers to start opening their purse strings and help generate demand for new homes. Protection of consumer interests, promotion of fair play in real estate transactions and ensuring timely execution of projects have been some of the long pending demands of Indian home buyers.”
Also, as perceived economic outlook improves, consumers feel optimistic about their levels of job security and household income. The Index trends and the underlying survey data also suggests that a rising number of consumers would be keen to invest in residential properties subject to availability of affordable housing projects and cheap loans.
Southern India Leads over Western; Hyderabadis most optimist and Ahmadavadis the least
In June 2015, among the regions, South India had the highest Index level of 48.9 while West India had the lowest level of 40.5. Real Estate developers can expect a rise in home demand in southern cities like Hyderabad, Bangalore and Mangalore, especially if they are successful in wooing consumers with affordable housing schemes. However, western cities like Mumbai and Ahmedabad would take some time to reflect any significant rise in demand unlike their Southern counterparts.
Based on the results of the survey carried out in June 2015, Hyderabad had the highest index level of 74.3 while Ahmedabad ranked the lowest with an index level of 11.1.