Team L&M
Demand for affordable homes has nosedived since Covid-19, initially because this segment’s target clientele was financially impacted by the pandemic. However, the ANAROCK-FICCI Homebuyer Sentiment Survey – H1 2024 has identified other pain points. At least 53 per cent homebuyers are dissatisfied with the currently available options in this vital segment across cities. Anuj Puri, Chairman – ANAROCK Group, says, “The top three reasons why prospective affordable homebuyers’ disenchantment with the currently available affordable housing supply are bad project location accessibility, questionable construction quality and poor design, and constricted unit sizes. Of the dissatisfied affordable home seekers polled in our survey, a whopping 92% respondents identify project location as the biggest grouse, while 84 per cent state low construction quality and inferior design elements as major deterrents. 68 per cent respondents find the available unit sizes too small to be attractive.”
Declining demand for affordable housing has had a cascading impact on its supply in the last one year. ANAROCK data highlights the shrinking supply of affordable housing in major cities, dropping from 26 per cent of total launches in 2021 to just 17 per cent by 9M 2024. Prior to the pandemic in 2019, affordable homes made up 40 per cent of new projects.
“Bigger homes continue to dominate buyer preferences despite spiralling prices in the last one year,” says Puri. “Over 51 per cent of the current survey respondents prefer 3BHK units and just 39 per cent will settle for 2BHK options. City-wise analysis indicates that the demand for 3BHKs is particularly high in Chennai, Hyderabad, Delhi-NCR, and Bengaluru, where over 50 per cent respondents prefer it over other flat sizes. Conversely, over 40% participants in Kolkata, MMR and Pune name 2BHKs as their preferred option.”
Patience is the New Black
In terms of preferred stages of construction, the H1 2024 survey shows a significant trend reversal. The demand ratio of ready-to-move-in homes to new launches now stands at 20:25. In H1 2020, the RTM-to-new launches demand ratio was 46:18. One major reason for this shift is that most homebuyers favour projects by large and listed developers, who they are confident will deliver their homes on time.
Another key highlight of the H1 2024 survey is that at least 57 per cent residential real estate investors are focused on steady rental income. This is far from surprising, since there has been a remarkable surge in rental rates across cities in the last two years (over 70 per cent in prominent micro markets). Rental earning potential has therefore taken centre-stage as an investment motivator.
While interest in the currently available affordable housing supply continues to decline, premium and luxury homes continue to dominate demand – at least 45% survey respondents now prefer homes priced >INR 90 lakh. In the survey’s pre-Covid 2019 edition, just 27% respondents were interested in properties in or above this price bracket.
The Plot Thickens
The latest survey also identifies a growing preference for residential plots, which 20 per cent of property seekers name as desirable options across cities. City-wise data highlights that this preference is most pronounced in the major Southern cities – 30 per cent buyers in Chennai prefer it, 29 per cent in Bengaluru, and 27 per cent in Hyderabad. Several large and branded developers have launched residential plot projects in these cities over the last few years and continue to find ready takers.
Villas and row houses are also markedly in demand in these southern cities. Contrastingly, more than 70 per cent survey participants in MMR, NCR and Pune prefer apartments.
Other Survey Highlights
♦ Real estate is the most preferred asset class for investment for over 59 per cent respondents, up two per cent against the previous survey
♦ 66 per cent millennials & 42 per cent Gen-X respondents will use their investment gains for purchasing a home in the future
♦ Over 67 per cent buyers seeking property for end-use vs 64 per cent in H2 2023 survey
♦ Top homebuyer demands today include timely project completion assurance, construction quality improvement/assurance, and well-ventilated homes.
