Among the key noticeable trends, the residential sector is all set to embark on a different growth trajectory with ‘home ownership’ gaining significant preference among the new-age millennials.
The Covid-19 pandemic – in more ways than one – has altered the way we live, think, work, or even socialize with people around us. And among the key noticeable trends, the residential sector is all set to embark on a different growth trajectory with ‘home ownership’ gaining significant preference among the new-age millennials.
According to an ANAROCK Consumer Sentiment Survey to gauge homebuyers’ preferences during the pandemic, a majority of participants (48%) consider real estate as the best asset class for investment in the current situation, largely due to lower risks attached, while 25% respondents prefer stocks as high volatility in the stock market over the last couple of months has resulted in dwindling investor confidence.
Similarly, gold has emerged as the 3rd most preferred choice with 18% respondents preferring the yellow metal for investment, while with only 9% respondents preferring fixed deposits, FDs have emerged as the least-preferred choice currently and seem to have somewhat lost their sheen due to the depleting interest rates in recent times.
As per the survey, 54% respondents consider ‘now’ to be an ideal time to buy a home as they have the opportunity to not just negotiate a good deal, but also get home loans at all-time low interest rates (7.15% – 7.8%), while 11% respondents do not consider it to be an ideal time to buy a property as fear over job loss and the overall slump in economic activity has dwindled their confidence.
“Homebuyers preference to mitigate risks is also at an all-time high with more than 72% preferring to buy from leading developers offering homes at high prices, but having least execution risk. Demand for affordable and mid segment properties (priced up to sub Rs 90 lakh budget) is also at unprecedented high,” says Prashant Thakur, Director & Head of Research, ANAROCK Group.
Interestingly, 59% home seekers prefer to buy property for end-use (a drop of 8% against the H2 2019 survey findings), while 41% want to purchase property for investment against 33% in the previous survey.
“End-users continue to rule the Indian residential market with 59% participants buying a property for self-use. Home ownership in crisis such as these becomes most pertinent for many people and gives the utmost satisfaction and security. So far as 41% people looking to purchase property from investment perspective is concerned, then the stock market volatility coupled with the recent turmoil in financial market are key factors determining this change. In comparison to the previous survey – H2 2019 – the share of participants looking to invest in property has risen by 8%,” says Thakur.
Another noteworthy trend which emerged from this survey is that over 46% participants prefer to buy ready-to-move-in property during the Covid-19 times in order to eliminate all possible construction risks. In the previous survey this number was just 35%.
Mid segment (Rs 45 Lakh – Rs 90 Lakh) is the most preferred budget category with 37% votes in its favour, followed closely by 36% favouring affordable homes (< Rs 45 Lakh).
Budget for Investment
“Affordable & Mid segment properties continue to remain the top choice of maximum property seekers. And, a crisis such as Covid-19 has further strengthened its base. Collectively, 73% home seekers prefer to buy properties priced within Rs 90 lakh budget. Naturally so, multiple government incentives for affordable housing has upped the game for this budget category in the last few years,” informs Thakur.
However, it is also likely that many buyers would have actually reduced their overall budget for property purchase due to Covid-19 as they would not want to lock-in a large amount of money in such uncertain times. Instead, they would buy a functional house based on their current needs only.