19% of people globally and 26% of Mainstream Indians have have moved to a new house within the pandemic period.
The COVID-19 pandemic has fundamentally altered the way homebuyers think of their dwellings. Consumer behavior has changed significantly, leading to a structural shift in the manner they look at how to live and where to live, including their sentiment towards home ownership. Cocooned in the comfort of their homes during the rigorous lockdown has led many to re-evaluate their priorities and cherish the sense of security that comes with owning a home.
In view of this, Knight Frank has come out with its Global Buyer Survey, which analyses the impact that Covid-19 has had on residential buyers’ attitudes to purchasing homes around the world.
As per the report, 19% of people globally have moved to a new house since the start of the pandemic; this rises to 25% in Australasia and North America. Of the non-movers, 20% are more inclined to move in 2021 even as the pandemic continues.
In the Indian edition of the survey, 26% of Mainstream Indians had moved their residences within the pandemic period. These relocations were motivated by factors like want of more open space and proximity to friends and family. For Indian Mainstream non-movers, 32% were more inclined to move residences in the next 12 months. An overwhelming 87% of the respondents who desire to move homes in the next 12 months, favoured the suburban neighbourhood of their current city of residence, while 13% of respondents who want to relocate, may consider an alternate city.
WILLINGNESS TO RELOCATE IN THE NEXT 12 MONTHS AS A RESULT OF THE PANDEMIC
Globally, 64% of the respondents expect the value of their primary residence to increase in the next 12 months. In case of the Global Indian segment, which represents the higher income segment, 32% expect prices to rise. Reflecting a more optimistic outlook, 61% respondents in the Mainstream Indian segment expect prices of their primary residences to rise in the next 12 months.
32% of the respondents from the Mainstream Indian segment expressed willingness to move into a new home in the next 12 months as a result of the pandemic, whereas 14% from the Global Indian segment indicated a desire for relocation. In a price-sensitive environment, more than 50% across all income segments in India cited lack of willingness to pay a premium for branded residences. Marking a significant citation, 32% of the Global Indian segment expressed willingness to pay a premium for a greener home.
The report emphasizes that future of work will play a significant part not only for the commercial sector but also for the residential. More than half of the respondents in the Mainstream Indian segment expect to be back in office for the entire work week once all restrictions are lifted. 47% of the Global Indian segment respondents expect to continue working for 2-4 days in a week from office once all restrictions are lifted. In the Mainstream Indian Segment, the highest inclination towards 5 days of work from office was shown by professionals i.e. lawyers, architects, doctors, chartered accountants etc. In case of the salaried class segment, the preference for work from office ranged from 3 to 5 days. This is largely due to the impact of tech firm employees working from home.
Globally, 59% of respondents envisage working 3-5 days in a week from office once all restrictions are lifted. In the Middle East and Asia, the figure is 41% and 36%, respectively.
Commenting on the same, Shishir Baijal, Chairman & Managing Director, Knight Frank India, said, “The pandemic has changed the outlook towards ownership of homes. Globally, two trends have stood out in the last few months. Firstly, a growing ambivalence of some buyers when it comes to location, provided they can secure a co-primary home that delivers the lifestyle and enjoyment they feel they’ve missed out on. And, secondly, given low savings rates and frothy stock markets, buyers are taking a more defensive stance by rebalancing their portfolios with a greater focus on tangible assets such as property.”
Shishir added, “The pandemic has changed the outlook towards ownership of homes right across the different income strata in India. Our Buyer Survey confirms that across the spectrum of Indian homebuyers, 32% showed interest in relocating from their pre-pandemic homes. It is observed that apart from the spending propensity and house type that typically govern an Indian home buyer’s purchase decision, factors such as access to open green spaces, healthcare and proximity to workplace have also started playing an important role. Energy efficient homes are also gaining traction as the concept is finding preference amongst home buyers in India.”
Optimistic outlook for price appreciation in primary residences
Globally, over two-thirds of respondents expect the value of their current home to increase in the next year with most expecting a rise between 1% and 9% over the 12-month period. This coincides with Knight Frank’s Prime Global Forecast Index which highlights that house prices on average, are likely to increase by 4% in 2021 globally.
From India’s context, there is more buoyancy in sentiment from the Mainstream Indian segment than the Global Indian segment. Nearly 58% respondents in Mumbai and Kolkata expected up to 10% increase in residential prices, while 53% in Pune also have a similar expectation. More than 60% respondents in Southern cities expect up to 20% price increase in next 12 months. Around 19% respondents in Bengaluru and 18% in Chennai expected prices to increase 20% or more in the next 12 months.
From the global aspect, since the advent of the pandemic, as many as 19% of respondents relocated to a new house. The Global Indian segment, however, remained cautious of relocating during the pandemic, with only 7% having moved to a new house in the past 12 months. In contrast, nearly 26% of respondents in the Mainstream Indian Segment made the move to relocate in the same period.
Sharing details on the spending propensity to buy a new home, the report cited that 38% respondents from the Mainstream Indian segment indicated an increase in budgetary allocation towards residential purchase. More than half of the Global Indian segment respondents indicated no change.
The attitudes of the Mainstream Indian segment buyers in South India are fairly optimistic when it comes to spending propensity for buying new homes. 63% in Chennai, 54% in Hyderabad and 39% in Bengaluru have indicated an increase in spending propensity.