Indians continue to see real estate as a preferred asset for investment, as 50% expect rates to increase

Rising interest rates in the US and a subsequent rate hike by the RBI is expected to make home loans expensive. But only time will tell the impact of these aggressive measures to buckle inflation on real state demand in the country. Land has traditionally been considered a source of financial security as well as social status in India, and is hence seen as a safe asset to invest in.

Now, a joint survey by Housing.Com and NAREDCO on ‘’Residential Realty Consumer Sentiment Survey H2 2022’’ conducted with over 1000 participants, has confirmed that real estate continues to be the preferred asset class compared to other assets such as stocks, gold and fixed deposit with nearly half (47 per cent) of the respondents indicating the same. Nearly 50 per cent of prospective customers are expecting prices to rise in coming months due to strong demand during the festive season.

Nearly 21 percent of respondents prefer to invest in the stock market, 16 percent in fixed deposits and 15 percent in gold. Housing prices recorded a 7 percent YoY increase in April-June quarter of 2022.

‘’In the current situation, where upward inflationary pressures and rising property prices have put a damper on consumer sentiment, market stimuli such as stamp duty waivers, tax rebates and flexible payment plans, and discount schemes will definitely act as boosters for the fence-sitting buyers.

Homebuyers expect property prices to rise further in the coming months given the current macro situation, which will further drive up demand in the short term,,’’ said Housing.com CEO Dhruv Agarwala.

For the coming six months, 34 percent of homebuyers have suggested that they are willing to buy a home completely online or after one site visit. On the other hand, the share of people opting for multiple site visits has gone up to 66 per cent on the back of vaccination and minimal restrictions – a positive trend in the current real estate scenario, as it indicates intensifying home-buying activity in a conventional market like India.

Flexible payment plans and discounts have gained more importance amongst homebuyers, 73 per cent of whom have opined that it will drive them closer to purchasing a home in the coming months.

Survey indicates that 48 per cent of respondents are anticipating the property prices to rise even more in the coming six months.

‘’Real estate has remained a favourite asset class among potential buyers. Demand for housing will continue to be high. Consumers' ever-increasing desire to own a home and their goal for financial security and stability has been a significant driving force for housing sales over the past two years. The upcoming festive season will likely bring more deals favouring first-time homebuyers willing to enter the market. With end users remaining confident about the economy in the coming months, the real estate sector will likely register a remarkable quarter, setting a precedent for the coming year,’’ observed NAREDCO President Rajan Bandelkar.

Further survey suggests that 58 per cent of the homebuyers, who are mainly end-users, are looking for ready-to-move-in (RTMI) property, a slight uptick from 57 per cent in H1 2022. While the homebuyer preference lies in the RTMI inventory, our insights suggest that only 25 per cent of the available primary stock currently falls in this category. Moreover, 62 percent of homebuyers want to buy the property from developers, who charge a high premium on such homes, thus widening the gap between consumer preference and the availability of the right product at the right price.

According to a survey, healthcare facilities continue to be one of the top amenities that homebuyers want in close vicinity of their property across the top eight cities. Another amenity that consumers are actively looking for near their properties is recreational and open spaces. The lockdown and restrictions on movement during the pandemic have highlighted the need for and importance of open spaces in close proximity to the homes. Additionally, the  homebuyers are looking for properties near the city centre. This can be attributed to the fact that most of the healthcare services in urban areas are concentrated in and near the city centres.