The latest Buyer's Sentiment Survey by Magicbricks has revealed that the buyer’s sentiment has revived with 93% respondents being positive on buying property as compared to 67% in its last survey in April 2020.
The Covid-19 pandemic hit the economy and most industries hard, including the real estate sector. However, with the announcement of the Unlock phase by the government, the overall economy has started adapting to the ‘new normal’. The nation has started witnessing signs of potential market recovery with many businesses resuming operations.
In line with the positive economic indicators in India, consumer sentiments appear to be more optimistic than they were two months before. For instance, the latest Buyer’s Sentiment Survey by Magicbricks has revealed that the buyer’s sentiment has revived with 93% respondents being positive on buying property as compared to 67% in its last survey in April 2020. About 32% of respondents mentioned that they are searching for properties on discounts. Interestingly, the majority of these respondents are second-time home buyers which indicates that not only end-users but investors have also started looking for opportunities.
The COVID-19 crisis resulted in liquidity issues, with construction delays adversely impacting the supply side and jobs whereas the economic uncertainty muted the demand side. However, subsequent stabilization of the initial panic and adoption of new normal has led to an improvement in buyer’s sentiment. With the fear of price drop settling down across the country, the buyer is more confident today in making a purchase decision, the survey points out.
The significant difference between the pre-COVID and current buying timelines shows that the purchase cycle is looking to revert to its natural trajectory slowly. The buyer timelines are further expected to rationalize with buyers likely to either grab attractive opportunities or rationalize their price expectations.
Although COVID-19 continues to spread throughout the country, the sign of recovery in the European countries (Spain and Italy), low mortality rate in India and with some positive news coming in on a cure very soon have provided a sigh of relief in the Indian market. While the lockdown has equally affected the overall spending across the sectors, the market is coming back to normalcy.
The quick recovery in the market can also be attributed to the Indian traditional culture of saving. Traditionally, Indians give paramount importance to the home-ownership, which helped the real estate market to see a quick rebound.
The survey has also revealed 87% of the respondents are looking to buy property for self-use, and only 13% for investment. This means that the overall recovery sentiment is dominated by end-users.
“In our opinion, long-term strategic investors are still active in the market and are looking for attractive deals and long-term gains. Interestingly, about 36% of the respondents said in the survey that they are not first-time buyers,” says Sudhir Pai, CEO, Magicbricks.
Buyers planning to cut overall investment budget by 10% to 30%
As the COVID-19 pandemic slowed down the economic growth, it has had a significant toll on the budget of homebuyers over the last three months. About 73% respondents to the 2nd Edition of the survey have responded with a definite cut in their budget for purchasing a residential property, ironing out the trend which the 1st edition of the survey in April 2020 established.
However, this trend comes as a boon to the affordable housing segment, as the reductions in the budget of homebuyers are expected to bring many new interested buyers to the affordable housing bracket. Additionally, the buyers also plan to look for smaller configurations with reduction in their budget.
Out of the total respondents seeking to decrease the budget, a substantial 56% were looking to reduce their budget by more than 20%. At the same time, 32% indicated that they are trying to cut their home buying budget by 11-20%. With prices not showing any significant downward trends, these budget cuts may lead to demand for smaller configuration homes to reduce the overall investment ticket size. While across all significant cities, 70%-80% of the respondents have seen a cut in their budget, the maximum level of budget reduction seems to be in Chennai, Hyderabad, Delhi- NCR and Mumbai.