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Wary of delays, 60% buyers now prefer buying homes from resale market

Resale market seeing greater traction in Bengaluru and Chennai compared to Gurugram and Noida

Representative Image. (Source: Wikimedia Commons)

Representative Image. (Source: Wikimedia Commons)

Delivery delays that plague India’s housing sector have led to 60 percent of homebuyers now turning to resale market to purchase ready-to-move-in properties, data accessed from NoBroker has revealed.

According to data shared by protech unicorn, the ratio of resale to primary transactions has improved from 1:1 to 2:1, which means that compared to one house sold in the resale market earlier, now two houses sold in the resale market for every one under-construction house.

“The shift in preference is due to delay in possession of projects by builders. End-users prefer not to take project construction risks. Besides, it is easy for buyers to look and feel a ready project and take quick decisions to invest rather than go in for an under-construction project,” said Amit Agarwal, CEO and co-founder of NoBroker.com

Cities such as Bengaluru and Chennai have resale- primary ratio of more than 2.5:1, since these cities are dominated by end-user homebuyers.

Delhi’s neighbours Gurugram in Haryana and Noida in Uttar Pradesh have a lower resale-primary ratio—1.5:1, as a high proportion of homebuyers are investors.

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Data shared by NoBroker shows that 72 percent of buyers prefer to buy property from the resale market in Bengaluru and Chennai compared to 60 percent in NCR.

As the resale market is dominated by homebuyers looking for end-use rather than for just investment, the dominant demographic is the young families and also people in the age group of above 35 years.

A locality is a strong indicator of the ratio of resale and primary transactions, Agarwal said. For well-developed and/or older localities, where new developments are few, homebuyers prefer resale properties in the market due to supply constraints.

New and upcoming neighbourhoods would have a low ratio of resale versus primary due to ample availability of new projects to choose from. Generally, localities within the city centres will have a higher resale to primary ratio and vice versa.

Besides the feel and touch factor and less risk of possession delays, homebuyers generally prefer to purchase a property in the resale market because in the primary market, GST is applicable if the occupation certificate for the property has not been obtained, which is generally the case as most primary properties available are under construction.

After the three waves of COVID-19, new launches have come down dramatically compared to five years ago. There is also a big inventory of unsold home available through the resale market. Besides, most buyers (almost 75 percent) prefer 2BHK units and 25 percent look for 3BHK units.

There is more room for negotiation in the secondary market since it is a customer-to-customer transaction and often owners have already made a profit on their investments.

 
Vandana Ramnani
first published: Mar 16, 2022 01:56 pm
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