Property the most preferred asset class but economic uncertainties dampen festive buying: Track2Realty survey

Indians continue to prefer immovable property to other assets, with as many as 81% participants who took part in a recent survey, voting in favour of this asset class. According to a pan-India survey conducted by real estate think-tank group, Track2Realty, 76% participants believe no other asset class can appreciate as much as property in the long term. In fact, 82% even endorse property as the least volatile asset, in the wake of economic uncertainties.

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In that case, what is holding back property seekers from investing in real estate this festive season? 93% respondents who participated in the survey blame it on the economic uncertainties and bleak job market outlook.

Track2Realty conducted the online survey, with a sample size of 3,000 respondents, where 58% were males and 42% were females. The respondents were asked both open-ended and closed-ended questions and the responses were grouped in five key areas of economic outlook, job market outlook, property quest, property returns and confidence-boosting measures. The survey was aimed at finding the mood of the nation on the eve of this festive season and what could be done, to bring the fence-sitting buyers back into the market.

Job market uncertainties discourage real estate purchases

“If you ask me whether I would like to buy a property this festive season, my reply, naturally, would be ‘yes’. Property is not just an asset but also holds emotional value. The real issue today, is the uncertain job market; reason enough to be apprehensive. Prices during this festive season are quite attractive too and I am expecting some good marketing offers, as well. However, the layoffs that I have witnessed in my office are scary,” says R Jaishankar, an IT professional in Noida.

The study found that more than the project execution uncertainties, it was job market uncertainties that bothered Indian home buyers. In fact, 62% of Indians cited the bleak job market to be the reason for apprehension, as against only 38% buyers who were afraid of project delays. A large share of the buyers, as many as 78%, believed there were many ready-to-move-in options available in the market today.

“The market never had this much ready-to-move-in options. So, the fear of projects getting delayed, is not something that is a deterrent to me. My real issue is, what if I lose my job tomorrow. You know how a distress sale causes huge loss with the home purchase. I wish there was some safety valve to bank upon,” says Ramya Maharshi, a fashion designer in Bengaluru.

Realty investments no longer ideal for short-term gains, say buyers

The survey also found that 88% Indians believed that property was no longer the choice of short-term momentum traders and speculators, while 86% believed property was best valued over a period.

Similarly, 79% Indians maintained that short-term property exchanges are no longer a business strategy. Nearly all the potential home buyers, as many as 94%, believed that short-term sales indicated distress sales that would be a major loss in today’s market.

Is property the best hedge against inflation? As many as 90% believe it is but only over a period of 10 years and more. Short-term property gains have been anticipated by only 10% Indians.

Home buyers seek home loan protection plans, assurance of RoI

A whopping majority of the Indians, as many as 94%, were, nevertheless, ready to take a plunge into the housing market, only if there was a back-up plan in case of any post-purchase economic fallout. The home buyers, hence, demand some sort of pay cheque protection plan in the Indian housing market – 90% home buyers suggested some sort of sovereign guarantee, like EMI deferral for at least two two years in case of job loss and loan restructuring in case of proven salary cut.

“Give me a sovereign assurance that my house is insulated against future job uncertainties, even if that insurance is only for a year or two. Similarly, if my EMIs are deferred during the unemployment transition and also, if I have the option to restructure my bank loan EMI and tenure if I face a salary cut, I am ready to commit this festive season. My finances are supporting me to buy a house but my fears over the job market are not,” says Himanshu Jha, a chartered accountant in Mumbai.

Was the EMI deferment during the Covid-induced lockdown of any help? 94% Indians believe that the move was merely an eyewash.

Covid seems to have dented the confidence of the Indians. It is, hence, no surprise that 90% Indians recommend home loan protection plans to be an integral part of housing mortgages. 74% categorically maintain they would not mind paying extra, so that the loan is no longer a liability for survivors, if the borrower dies.

The insecurities of the job market have dented the confidence of Indian home buyers so much that 76% believe the loan-to-value ratio should not exceed 60%, while as many as 78% believe the debt-to-income ratio should not be more than 40% in today’s uncertain times.

Survey highlights

81%, Indians have an affinity for owning one’s own property.
76% believe no other asset class can appreciate as much as a piece of property.
82% even endorse property for the reasons of being least volatile in the wake of economic uncertainties.
93% blame economic uncertainties and bleak job market outlook, for housing degrowth.
62% Indians cited the bleak job market to be the reason for apprehension.
78% believe there are many ready-to-move-in options available in the market today.
88% Indians believe property is no longer the game of short-term momentum traders and speculators.
86% respondents believe property is best valued over a period.
79% Indians believe short-term property exchanges are no longer a business strategy but indicate distress sale.
94% believe short-term sale means distress sale.
90% believe property is the best hedge over 10 years.
90% of buyers suggest some sort of sovereign guarantee.
94% Indians believe the EMI deferment during Covid lockdown, was an eyewash.
74% maintain they do not mind paying extra, so that the loan is no longer a liability for survivors, if the borrower dies.
76% believe the LTV should not exceed 60%.
78%, believe the DTI should not be more than 40% in today’s uncertain times.

(The writer is CEO, Track2Realty)

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Ravi Sinha

Ravi Sinha is a journalist with nearly two decades of cross-discipline media exposure. He is the CEO of real estate think-tank group Track2Realty. He has been writing extensively on the real estate sector for nearly a decade. Evaluation of real estate brand performance is his expertise and he has immense insight into consumers’ psychograph in the property market.

Twitter: https://twitter.com/ravitrack2media