Residential estate continues to be the preferred asset class for investment in the wake of the COVID-19 pandemic compared to fixed deposits and gold even as homebuyers remain cautious but optimistic about buying property as 60% are confident of retaining their jobs in the next six months despite the second wave, a survey has said.
Healthcare infrastructure has gained importance during the pandemic, and proximity to the same is becoming the most sought-after amenity for selecting a property. Nearly 50 percent respondents indicate to look for it while purchasing a home, a survey titled Residential Realty - Consumer Sentiment Outlook January-June 2021 has said.
The economic and income outlook for the coming six months is more optimistic as compared to H1 2020. Also, while the second wave did see homebuyers shying away from making a purchase, opening up of activities and subsiding coronavirus cases have seen buyers resuming the home searches quicker than the previous lockdown period, it said.
As many as 40 percent think that the overall economic scenario will improve for the coming six months. As many as 35 percent of the respondents have hinted at resuming their home search in the coming three months.
Homebuyers in Hyderabad keen to resume home searches, quicker than other metros – 40 percent respondents to resume search in coming three months, it said.
During the first nationwide lockdown in 2020, the overall uncertainty regarding economy and employment resulted in buyers deferring the search for a home by a year.
“The second wave largely sees consumers more confident about their income, with obvious impact on spending as also willingness to opt for a home loan. This has created an optimistic cue for the Indian real estate sector in the near future,” said Niranjan Hiranandani, president Naredco and founder and MD of Hiranandani Group.
Residential real estate continues to be the most preferred investment asset class for the majority of the potential homebuyers. Of the total respondents, 43 percent feel that real estate is a worthwhile investment compared to other assets such as fixed deposits, gold and the stock market in H1 2021. In comparison, 35 percent of the homebuyers reported that real estate was the preferred asset class in the same period the previous year.
Buyers seek flexible payment plans and discount schemes
The survey findings highlighted that majority of the potential homebuyers opine that the intent to buy would be boosted by the right pricing along with flexible payment plans and discount schemes.
As many as 71 per cent buyers feel that flexible payment plans and discounts will provide much-needed financial aid during current times and drive them to make purchase decisions.
Real estate developers are operating at thin margins but discounts and freebies are being offered by those developers who are stuck with more supply and also have other commitments like debt repayment.
"The price of product is governed by demand-supply. If builders are locked with excess inventories, they do offer discounts. Discounts are also being given sometime as feel good factor to customers. The amount differs from case to case and they are often doled out to test the market," said Hiranandani, adding if builders were offering discounts of 9-10% earlier, they are offering only 6-7% now.
He also pointed out that prices of affordable housing may increase in the next six months unless there is a drop in prices of steel and cement.
The stamp duty cut in Maharashtra and the resultant increase in sales registrations only substantiates the buyers interest in availing discounts, flexi-plans and rebates.
Work from Home driving demand for upgrading to larger homes
As per the survey, 53 percent of homebuyers reported that they want to upgrade their home compared to 33 percent in the corresponding period of the last year.
Almost 55-60% of the potential homebuyers in Mumbai, Pune and Delhi NCR looking for bigger homes as work-from-home continues, the highest compared to other metros.
The residential realty consumer sentiment outlook is a half-yearly assessment to gauge residential demand predispositions for the coming six months.
The consumer sentiment insight series is an attempt not only to gauge the buying and renting predispositions of the real estate consumer, but also to understand their outlook on the overall economic scenario and their confidence in the stability of income in the current COVID-19 pandemic situation.
The latest survey was conducted between January to June 2021. The insights represent the view of more than three thousand potential homebuyers who reach out to Housing.com to complete their property search.
During the second wave, the recovery momentum of the residential real estate sector in India also slackened during April–May 2021. The aggregate residential demand in Q2 2021 declined by 16 percent YoY but June 2021 clocked nearly 50 percent of the housing sales in Q2 2021, hinting at a more robust recovery. This comes on the back of subsiding cases and lifting of local restrictions.
Also, as the central bank continues to have an accommodative stance, the low interest rates continue to motivate the homebuyers.
"The health crisis has reinforced the importance of home ownership across the world. As a result, the residential real estate market is not only witnessing fresh demand from first time homebuyers but also from a lot of consumers who are upgrading to bigger apartments," said Dhruv Agarwala, Group CEO, Housing.com, Makaan.com and PropTiger.com"Builders' margins for under construction properties have reduced due to increase in construction costs and land prices in some cities. Therefore, there is little scope for reduction in basic selling price (BSP). However, builders have been offering flexible payment plans and discounts in some cases to attract customers," said Mani Rangarajan, Group COO, Housing.com, Makaan.com and PropTiger.com.