Introduction
Homebuying trends shaping real estate market in India
A heightened demand for luxury real estate and larger spaces are driving homebuyer sentiment
Every few years, there is a shift in the way the real estate sector in India functions. Around 2019-20, PMAY and the affordable category created much buzz. The decadal low home loan interest rates and comparatively lower property prices enabled the middle class to realise their homeownership aspirations. However, the tide has changed yet again with a boom in the luxury real estate market, and increased demand for balconies. The recent FICCI-Anarock Homebuyer Sentiment Survey reveals more such emerging trends. Here are a few key ones.
Trend 1: Demand shrinks for affordable housing
The survey reveals that the demand for affordable housing continues to witness a decline—from 40 per cent in H2 2020 to just 21 per cent in H2 2023, a reduction of
19 per cent. Buyers of these affordable homes continue to be in the wait-and-watch mode, which inevitably has prompted developers to also reduce new supply in this budget category. Anarock data indicates that new supply share in the affordable category has shrunk considerably in the last two years across the top seven cities—from 26 per cent in 2021 to just 18 per cent in 2023. Back in 2019, the share was 40 per cent of the total new launches.
Boman Irani, president, CREDAI National opines, “As a developer body witnessing the declining demand for affordable housing in India, it’s concerning yet understandable. Hurdles in policies contribute to this downturn as the current cap of Rs 45 lakh for affordable homes makes it highly unfeasible for developers to build more offerings in this segment, with inflationary factors alone shooting up the cost of building an affordable home and discouraging developers from taking up such projects.
To address this, policymakers must prioritise streamlining approval processes, amending the definition of affordable housing, and incentivising affordable housing initiatives for both buyers and developers. Collaboration between government and private sectors is imperative to bridge the affordability gap.”
Trend 2: Projects nearing completion in high demand
The survey reveals that as of H2 2023, at least 53 per cent of potential homebuyers expressed a preference for properties nearing completion, followed by 24 per cent for new launches and 23 per cent for ready-to-move-in homes. The primary reason for the same can be attributed to the timely delivery of projects and the presence of big and reputed developers in the market. Attractive payment schemes and reduced rates than ready-to-move-in homes are also driving this demand.
Trend 3: Residential real estate, a viable investment option for investors
Against the H2 2022 survey, there has been a seven per cent increase in the proportion of participants who are buying property from an investment perspective rather than for self-use. In H2 2023, a significant 36 per cent of prospective buyers aimed to purchase a property from an investment standpoint. “Amidst fluctuating financial markets, residential real estate has emerged as a beacon of stability and long-term profitability. The shift is underpinned by a combination of promising rental yields, and a resurgence in housing demand post-pandemic,” shares Himanshu Jain, VP, sales, marketing and CRM of a real estate company.
Trend 4: Increased demand for luxury homes
In the last couple of years, the luxury housing market has emerged as the clear winner in terms of demand and sales. “As per Anarock Research, as many as 4,76,530 units were sold across the top seven cities in 2023, of which the share of luxury homes’ (priced >Rs 1.5 crore) sales stood at 25 per cent with the sale of approximately 1,19,130 units. Unit-wise, there has been a whopping 81 per cent yearly jump in the number of luxury units sold in 2023—from around 65,677 luxury units sold in 2022 to nearly 1,19,130 luxury units sold in 2023. This indicates the growing demand for luxury homes across the top seven cities,” mentions Santhosh Kumar, vice chairman, Anarock Group. Prashant Sharma, president, of NAREDCO Maharashtra adds, “Increase in wealth of high-net-worth individuals, the desire for exclusivity, and the availability of bespoke luxury amenities are driving this trend.” Irani believes that the demand for luxury housing will remain strong throughout 2024.
Trend 5: Bigger, the better
The survey reveals that at least 50 per cent of property seekers now prefer three-BHK units, while 38 per cent prefer to buy a two-BHK home. In last year’s survey, demand for three BHKs stood at 42 per cent (H2 2022). “The lockdown highlighted the need for separate spaces to live, work, and study within the home itself. These needs arose not just among the large joint families, but also among nuclear families, thus leading to a rise in demand for these three-BHKs,” opines Anand Ramachandran, senior VP, of business expansions (West) of a real estate company.
Trend 6: Balcony – the hot favourite
At least 75 per cent of property seekers prefer to have balconies, finds the survey. These preferences are now dictated by new realities such as the hybrid work model and the need for open spaces. Ramachandran highlights, “It is interesting to see this behaviour even in the smaller configurations like one-BHK. However, consumers are seeing value in owning a balcony in the form of sipping the morning cup of tea or enjoying a yoga routine on their private sundeck.”