By: Team Track2Realty
Don’t wait for the right time to buy a house expecting a price correction, say seven out of ten home buyers who are on house hunting. Contrary to the price correction reports, the property search of prospective buyers and sellers across the country have convinced them that cheaper house in 2011 are a fancy and wishful thinking. At least those who have done their home work on property search are pretty sure about it. A majority of them, 70 per cent of the home seekers are convinced that they will have to shell more money to buy a house in 2011, as compared to the last few years. An equally high number of those, 74 per cent who invested in second house and are planning to sell this year have been assured by the dealers & brokers for higher returns.
Three out of the five respondents, 66 per cent, who bought their first house ten years back admit that the property has earned more to the family than the main bread winner if they calculate the corresponding price appreciation in all these year. In 2000 Ritesh Chaudhury bought a flat in Rs 11 lakhs in East Delhi’s Patparganj, a deserted place in trans-Yamuna during those days. This was an investment that he repented, friends ridiculed and family cribbed about during those days. Not today when he wants to sell it off and the dealers are standing ready with buyers offering Rs. 65 lakhs.
This property boom, however, is not just a metro phenomenon. Home buyers who invested in property are reaping the benefits of real estate boom even in tier-II cities like Patna and Lucknow where the property prices today are unbelievably at par with Delhi-NCR and some other metro cities. Raj Anand, a resident of Patna bought a flat in posh Bailey Road of Patna at Rs 14 lakhs in 2002. Today the same apartment costs around Rs. 60 lakhs. Today, a retired government employee of Bihar Electricity Board repents not investing his pension & gratuity money into another flat post retirement in 2004.
76 per cent are repenting that the media reports on price correction have misled them. Nearly five out of the 10 home buyers, 47 per cent, are not even sure what price correction means. Four in five, 82 per cent, who went on a house hunt in the last three years, are disillusioned with the affordable houses advertised in the newspapers. Sanjay Kaul who postponed his house buying in the last three years, expecting every time that reports of price correction is just on the cards, is extremely disillusioned today with his decision to postpone the house purchase. He feels he will have to pay around 3-5 lakhs more for a house in the same Vaishali (a pocket of NCR falling in Ghaziabad district of Uttar Pradesh) this year.
Eight out of 10, 83 per cent, assert that if the reported correction of 15-20 per cent is true, they are ready to buy it out right now. These are the findings of a ten city exclusive survey by Track2Realty. Track2Realty conducted this survey in ten cities-Delhi, Chandigarh, Mumbai, Pune, Kolkata, Chennai, Ahmedabad, Jaipur, Patna and Allahabad between January 2 and 20. A total number of 2000 prospective buyers & sellers in search of property prices and 250 brokers & agents were interviewed. The property quest was put into 3 categories—seeking property up to the price range of Rs. 30 lakh, seeking a house up to the range of 70 lakhs and seeking upper segment house of Rs. 70 lakhs and above. Interestingly, the voice and market search of the prospective buyers & sellers in the all the three segments indicated the same results.
In most of the cities home seekers’ property search indicates that the prices are only going to head northwards. 72 per cent believe that if they missed it now, they may not be able to buy it ever. 90 per cent repent investing in other instruments and wish they could have put the same money in buying a house. The young India, below 30 years, seems to bother least about the price correction. 80 per cent of them already owning a house bought in the last 7 years or less are the prime demand drivers. They are so bullish on house as an instrument of investment that they are already searching for the second house.
What is most interesting find of the survey is the fact that majority of the buyers, 92 per cent don’t find media reports on 
property market very authentic. When it comes to house hunting, most of the prospective buyers and sellers still go for the physical search of the property and locality to understand the market and its price pattern. “How can I trust media reports when different media is reporting different price of the same property in Versova. Even real estate websites are misleading. When my local property dealer takes me for a ride if I don’t cross check it with another one, how can I trust one-way communication of media,” questions Anubhav Apte in Mumbai.
Similarly, as many brokers & agents, 90 per cent, believe that even property search sites are biased in their valuation of the property, that is often far away of the ground realities. “Why are property price listings on different newspapers different in the same locality? They are supposed to be based on our feedback, but no one ever consults us,” says Vijay Gurram in Chennai.
Three in five, 64 per cent, admit that price correction is a devised mechanism to keep end-users at bay and lure the speculators. More than seven out of 10, 74 per cent, in the business of commission on buying and selling admit that it suits their business to see property changing hands on a regular basis. As many as 96 per cent of brokers and agents in Mumbai question the rationale behind the reports of price correction in the city, clearly asserting that each locality within the city has its own demand drivers and micro level indicators.
Most of these brokers and property agents define three reasons for property prices to remain bullish in the year 2011. These are—
- Huge demand & supply gap
- Ever increasing input cost
- Most appreciating asset class among the investment instruments
However, those who are expecting property prices to come down have never done a physical search of a property and banking on the media reports and macro level economic indicators. While they cite rise in interest rates and oversupply to be the reasons of price correction, 78 per cent of them have never interacted, at least in the last one year, with the developers and the local brokers on the property prices. Nearly half of them, 53 per cent, have no plans either to buy a house in the next 2-3 years. Six out of 10, 64 per cent, who are expecting the price correction have no idea as to how much appreciation or depreciation has taken place in their locality.
Majority of the brokers and agents, as many as 92 per cent, believe that the market is still a sellers market. 70 per cent of these brokers accept that the benefits of even distress selling don’t reach to the end-users since there are enough investors & speculators still operating in the market. Seven of out 10, 73 per cent, such property agents admit that there is huge hunger line among end-users and they plan to buy house this year.
Additionally, the survey also noted that developers’ credibility counts more than the marginally discounted property by the fly-by-night operators. Nearly 7 out of ten, 68 per cent, of the prospective buyers said they would prefer to buy the house from a realty company with proven track record than unknown developers who may be selling 10-15 per cent less of what the market price stands at. Better safe than sorry approach was noticed in most of the cities in general and more vocal in metro cities. “Suddenly I find a wide range of developers coming up with a stand alone project, talking about affordable housing. But the experience with one of the friends who bought in 2008 with one such developer has been really bad. There are cracks in the ceilings and water leaking. I don’t want to end-up in similarly in consumer court after investing my lifetime of savings,” says a candid Deven Gathala in Pune.
METHODOLOGY
Track2Realty conducted this survey in ten cities – Delhi, Chandigarh, Mumbai, Pune, Kolkata, Chennai, Ahmedabad, Jaipur, Patna and Allahabad between January 2 and 20. A total number of 2000 prospective buyers & sellers in search of property prices and 250 brokers & agents were interviewed. The property quest was put into 3 categories—seeking property up to the price range of Rs. 30 lakh, seeking a house up to the range of 70 lakhs and seeking upper segment house of Rs. 70 lakhs and above.
In the 1st part of the survey a total sample size of 2000 house buyers & sellers was initially targeted. Out of these 1827 samples were finally zeroed down and considered for analysis. Rest 173 respondents were not considered for evaluation since they either gave incomplete questionnaires or were rejected for non-seriousness of their choices. In the 2nd part of the survey 250 brokers & property agents were interviewed. A separate set of structured questionnaire that was based on the quest of property, buying & selling pattern in the city and the availability of the residential units over there was given to the respondents who belonged to a mix of qualitative and quantitative socio-economic groups.
The total sample size among property buyers & sellers had 36 per cent females and 64 per cent males as a representative set. The surveying method was one-on-one interviews, in which the researchers explained the theme and purpose of the survey and then asked the questionnaire to the respondents and filled it then and there. All the researchers being the local residents of the city, they managed to assure the respondents complete anonymity.
The results were based on a set of 34 questions to the prospective buyers and sellers who are active in the realty market and assessing price pattern in the last 3-5 years. The answers were grouped into ten key factors of their exposure to the property market which were weighed according to their immediate need for a house. The survey found that more the house hunting & exposure by the respondents, the less was the expectations of a price correction. Those who were eager to buy or sell immediately were weighted at a higher percentage point, as against those who had plans to buy in the next few years.
