India’s residential real estate sector has sustained its positive trajectory in the latter half of 2022. As per Housing Research, from July to December of 2022, there was a significant increase of 79% in new supply and a 32% rise in demand in comparison to the same period the previous year. This manifestation of pent-up demand was evident in the housing market, with a pickup in the volume of housing loans and sustained residential sales momentum. As a result, prices have stabilized, and the construction of new dwellings has gained momentum. In India, a high proportion of disposable income is dedicated to consumption, and the pandemic led to a suppression of consumption that created a greater rebound force post the second wave.
Additionally, the improved sentiments regarding the economic scenario for both current and future expectations amid stabilized inflationary pressure indicate an overall optimistic approach amongst homebuyers for the next six months as indicated by our latest consumer sentiment survey. While the economic outlook has improved marginally, consumers are optimistic about their future earnings. The trends suggest that homebuyers, mainly end-users, are looking for budget-friendly properties with proximity to social infrastructure such as schools and healthcare services, followed by credibility of the developer. Following are the key trends of what homebuyers are looking for in the coming six months.
- Homebuyers are cautious yet optimistic about the economic scenario for the coming months, with 74 per cent opining that the economy will improve in H1 2023, as compared to 79 per cent in the year-ago period. While the ongoing global uncertainties have moderated the outlook, the sentiments regarding the economy remain well above the dip recorded during 2020.
- The income outlook, on the other hand, has strengthened since 2020 while marginally dropping for H1 2023 to 64 per cent. The increase in tax rebate for personal income as per the recently announce Union Budget, will leave more disposable income in the hands of individuals to invest in homes, bolstering consumer confidence in their future earnings.
- Real estate continues to be the preferred asset class with 44 per cent of the respondents indicating the same compared to other assets such as stocks, gold and fixed deposit. This can be accredited to pandemic-induced factors, such as the increased importance of home ownership, the hybrid working model, and the need for safety and security.
- In the backdrop of upward pressure on property prices and waning sops such as stamp duty waivers and low-interest rates, the majority (74 per cent) of the homebuyers opined that flexible payment plans and discounts would be the driving factors for buying a home in the next six months.
- The homebuyer preferences have been visibly altered owing to the pandemic and economic environment. Our survey suggests that budget of the property, followed by location (proximity to social infrastructure) and credibility of the developer have been the key considerations for homebuyers in buying a home.
- Digital sales and marketing platforms have been ranked as the top avenues to acquire information about properties, according to potential homebuyers. While search and discovery always begin online, such platforms have evolved to offer advisory and transactional support.