The two realty hotspots NCR and MMR have seen particularly strong momentum in the sale of high-ticket bigger homes over the last few quarters.
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Despite global economic headwinds including layoffs by several large and small corporates, the bull run in the Indian housing market continued in the first quarter of the year. The market remained buoyant and interestingly there were several new trends noticed.
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For instance, quarterly housing sales reached all-time high with approx. 1,13,770 units sold in Q1 2023 across the top 7 cities amid significant rise in demand for high-ticket priced homes (>Rs 1.5 cr). This is a 14% yearly rise against approx. 99,550 units sold back in Q1 2022.
The consumer sentiment for bigger homes also continues unabated. According to the CII-ANAROCK report ‘The Housing Market Boom,’ out of a total of 4,662 survey participants, 42% currently prefer 3BHKs. 40% of the surveyed participants prefer 2BHKs, 12% will opt for 1BHK, and 6% seeks homes exceeding the 3BHK configuration.
The two realty hotspots NCR and MMR have seen particularly strong momentum in the sale of high-ticket bigger homes over the last few quarters, finds the report. Over 45% property seekers in NCR are looking to buy 3BHK homes in the near future. In the expensive MMR, 2BHKs appear to dominate the preference charts of 43% of respondents in this region, but over 32% buyers there are looking to buy 3BHKs.
The report highlights the overall sentiments of buyers amid current headwinds including another possible rate hike by the RBI in the near future. If that happens, housing sales momentum in the top 7 cities may well be in for a bumpy ride as at least 96% prospective buyers state that higher home loan rates will affect their homebuying decisions in the future
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For over 80% property seekers, prices remain an important factor as apart from home loan rates, the basic cost of property has been on the rise in the last one year.
ANAROCK data reveals that average property prices across the top 7 cities increased in the range of 6-9% in Q1 2023 when compared to Q1 2022, mainly due to an increase in the prices of construction raw materials and overall rise in demand. MMR and Bangalore recorded the highest 9% annual jump.
Commenting on the same, Anuj Puri, Chairman, CII Real Estate Confluence 2023 & Chairman – ANAROCK Group, said, “Rate hikes are just part of the overall demand scenario. Recent layoffs by both large and small corporates are likely to have at least some impact on the demand in the upcoming two quarters, and dent growth in the housing market. Many homebuyers impacted by layoffs may defer homebuying decisions until their employment situation stabilizes. Nevertheless, buying homes remains the top priority for everyone.”
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Currently, inflation is high and the state of the global economy directly or indirectly impacts housing demand in India. However, whatever demand gets deferred will be a temporary dynamic.
“There are high chances that by FY25, the current turbulence will have passed and the housing market will bounce back. Deferred demand is just that – it is put on hold, not destroyed,” Puri added.
The report further finds that millennials continue to drive the housing demand. Of the total participants that chose real estate as an asset class for investment, at least 52% were millennials who are mainly looking to buy homes for self-use. End-users still dominate the Indian housing market, with end-user vs investor ratio at 71:29. Of the total surveyed end-users, over 77% are millennials.
At least 36% respondents are zeroing in on homes that will be ready for possession within a year, and 58% want to buy properties priced within Rs 40 lakh and Rs 1.5 crore.
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Apart from price points and basic amenities in a project, the surveyed buyers are now focused on three primary aspects – timely project completion assurance, the availability of a study room, and adequate ventilation in the property. Over 90% of the surveyed homebuyers will not compromise on timely project completion, 62% insist on well-ventilated homes, and another 55% respondents consider a study room indispensable. It is evident that the Covid-19 pandemic has left a lasting impact on homebuyer preferences.
Commenting on the findings of the report, Aakash Ohri, Group Executive Director and Chief Business Officer, DLF Ltd, said, “There has been a shift in demand for larger spaces, not just in luxury but across all segments. Anyone who can afford is looking to upgrade to bigger spaces given the fact that they are spending more time at home. Buyers whose financial condition and lifestyle remained unaffected have developed a great interest in bigger homes. The impact of the past few years has reinforced the significance of spacious and bigger homes for indulgent living and as a stable investment. The need to upsize has already led to a surge in big-ticket transactions and this trend is expected to continue even in the year ahead.”
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Home buyers are not just looking for big spaces, but also homes with incredible views, set in a big piece of land and a notable architecture, that supports their vision of modern, luxurious, and sustainable living.
“Today more than ever, buyers are looking for bigger balconies and perhaps that half extra room that could be converted to a study or perhaps a little more seating space within the bedroom where they can set up their own temporary workstations. The focus is also on multi-utility rooms. Depending on the family’s requirement, a study room can double as a guest room or a pooja room can become a study room,” added Ohri.
Pradeep Aggarwal, Founder & Chairman, Signature Global, said, “As homebuyers prioritize space and functionality, the popularity of these versatile living spaces continues to soar. From growing families to work-from-home professionals, the demand for 3BHK homes in NCR reflects the diverse needs of today’s homebuyers. Whether it’s for creating a dedicated workspace or accommodating guests, it provides the flexibility that modern living demands. And with NCR’s dynamic lifestyle and booming infrastructure, it’s no surprise that 3BHK homes are becoming the go-to option for those seeking comfort, convenience, and style in their new abode.”
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Pankaj Bansal, Promoter and Director, M3M India, has similar views. “The aspirational middle-class millennials and Gen-Z are emerging as one of the key drivers of the realty economy, which is now expected to grow by 12-15% CAGR in the next five years. There is also a paradigm shift to 3 BHK from earlier 2 BHK. This shift is being seen in the majority of cities, including NCR. Keeping this in view, a majority of residential projects conceived and delivered by M3M have extra 0.5 accommodations, which are being used as study-room, puja-room and for other multiple purposes by the customers. There will also be a significant shift by the middle -class from mid-segment home in 2023, ranging from Rs 40-80 lakh to high-end luxury residential units, priced between Rs 80 lakh and Rs 1.50 crore – which is attributing jointly to about 62% of demand. This might be the reason that more of the real estate developers are also keeping their focus on growing segments. Though it is also true that the luxury and ultra-luxury segments too comprised a steadily rising share of new launches at 12% and 6%, respectively,” he said.
Amarjit Bakshi, CMD, Central Park, said, “Basis their experiences during the pandemic, homebuyers began to choose homes that filled the gap in their lifestyle in terms of amenities, big and spacious homes, specifications, security, close-to-nature living, etc. HNIs, UHNWIs, NRIs, neo-rich, and investors shifted their focus to real estate in India – either for living or investment. The share of luxury homes in total sales went up and so did the sale of luxury homes. The luxury housing market in NCR is witnessing impressive growth with the spurt in demand and new launches. As the market witnesses strengthened sentiments prevailing, the current trend reveals that housing demand will likely persist with prominent realty players gearing up to launch new residential developments.”
