For the first time, affordable housing is the lowest priority, with more than 34% respondent home seekers focused on properties priced between Rs 90 lakh and Rs 2.5 crore.
The COVID-19 pandemic has significantly changed the outlook of the prospective home buyers. Those who previously shied away from buying and preferred renting (millennials in particular) are now coming forward to buy a home. The key factor influencing this change is the sense of security that physical assets provide (for over 34% respondents), according to the latest CII-ANAROCK Consumer Sentiment Survey.
Attractive deals offered by developers was another important factor influencing their buying decisions (for 31%), followed by 17% voters who think that property prices have bottomed out and will only appreciate in the future. Stamp duty cuts (in Maharashtra) also gave a major fillip to housing sales in MMR and Pune.
For the first time, affordable housing is the lowest priority, with more than 34% respondent home seekers focused on properties priced between Rs 90 lakh and Rs 2.5 crore. While 35% favour properties priced between Rs 45 lakh and Rs 90 lakh, just 27% respondents voted in favour of affordable housing (priced <Rs 45 lakh). In the previous H2 2020 survey, approx. 36% respondent property seekers eyed budget housing.
COVID-19 has also drastically altered consumer preferences. The work from home and e-schooling realities have become the fulcrum of homebuying decisions in the post-pandemic world. And given that this scenario may prevail in the foreseeable future, homebuyers are considering several factors before buying a home. Interestingly, 60% respondents prefer well-ventilated homes while 57% think that timely completion of projects is another important feature. 52% want the construction quality to improve in the upcoming projects.
Just as the previous survey, real estate continues to be the best asset class for investment, but it is worthwhile to note the quantum of change in investor sentiments during the second wave. Notably, during the second wave investors were far better prepared as compared to the first wave when there was subdued investor confidence.
As seen now, investor confidence in real estate has increased – to 54% during the second wave from 48% in the first wave. The stock market also seemed attractive for 34% investors during the second wave as compared to 24% in the first wave. Meanwhile, the yellow metal (gold) and fixed deposits as an investment class have become less lucrative for investors.
Property for self-use Vs Investment purposes
Indian residential market is now majorly dominated by end-users. In the current survey, as many as 71% respondents looking to buy a property are doing it for self-use while only 29% are looking at it from an investment perspective. In comparison, during the COVID-19 first wave period survey, the share of investors was higher at 41%. One major factor driving this change – buying for self-use – is because affordability of homes has reached all-time best at approximately 27% in FY 2021 across all major cities. Offers and discounts doled out by developers coupled with lowest-best home loan rates are other major factors.
Near to completion properties gain traction
Ready-to-move-in property continues to be the most preferred (32% respondents) among the prospective buyers. However, in comparison to the COVID 1st wave period survey, a dip in its preference was witnessed– at least 14% since the COVID 1st wave levels. One major factor influencing this change could be the fact that post-COVID, the new supply was largely dominated by branded developers and buyers
considered it safe to buy from them. Also, there is limited inventory available in the ready category. Another possible reason is that developers have doled out multiple discounts and offers including flexible payment plans for their under construction projects which attracted prospective buyers.
Interestingly, in the COVID 2nd Wave survey results, property which will be ready within 6 months is the 2nd most preferred choice for over 24% property seekers. Meanwhile, 21% property seekers are now willing to purchase new launched property. This is 4% higher than the pre-COVID period survey.
38% respondents now looking to buy properties priced >Rs 90 lakh
Similar to the COVID 1st wave survey, property priced between Rs 45 lakh and Rs 90 lakh emerged the most preferred during the COVID 2nd wave period with nearly 35% property seekers preferring this budget range.
Altogether, 69% of this demand came in from Hyderabad, Bengaluru and Chennai. Availability of cheaper home loans was the key factor for majority of these respondents. Notably, contrary to the COVID 1st wave survey, affordable properties (<Rs 45 lakh) took a back-seat this time and stood at the 2nd spot, accounting for over 27% share as against 36% in the pre-COVID survey – a decrease of 9%.
Over 41% of this affordable housing demand currently came in from Pune, followed by 36% from Delhi-NCR and 31% from Kolkata. Further, around 25% property seekers preferred Rs 90 lakh to Rs 1.5 cr budget properties – increasing by 9% against the 1st wave survey.
Demand for luxury properties (>Rs 1.5 cr) also increased – from 11% in the COVID 1st wave survey to 13% in the COVID 2nd wave survey results. Nearly 63% of this demand is from Mumbai-MMR, followed by Bengaluru and Hyderabad.
Commenting on the survey results, Anuj Puri, Chairman – CII Real Estate Knowledge Session & Chairman – ANAROCK Group, said, “With the second wave receding since June, residential activity has picked momentum. Genuine buyers are back exploring options. As things stand now, we anticipate 2021 to be a year of slow retrieval and measured growth that will set the pace for an aggressive momentum in the new decade. While a new peak may not be attained immediately, it is anticipated that the housing market is likely to attain a new peak by 2023 with housing sales crossing the 3.17 lakh units mark and new launches over 2.62 lakh units.”