Track2Realty Survey
The real estate developers across the country might be living in denial but the distress sale is a predominant reality in the Indian housing market. More and more Indian home buyers are actually getting better deals in the resale market. This is leading to a stressful situation for the developers reeling with the inventory overhang and yet not ready to cut down the prices.
Nearly 3 out of 4 Indian home buyers, as many as 72%, believe distress sale is a market reality in real estate. As many as 68% buyers on property hunt are actually finding better deals in secondary market. More than half the buyers, 52% to be precise, are getting the distress deals in the range of 15-25% lower than the quoted market price.
Buyers across the NCR and Kolkata market are witness to the maximum distress deals, with as many as 78% and 74% are getting the discounted opportunity in the resale market respectively. Bengaluru and Pune market is witness to least distress sale, with only 30% and 34% getting the discounted property in the secondary market respectively.
These are the findings of an online poll by Track2Realty. The aim of the survey was to assess the stress in the housing market leading to distress sale. The buyers were asked structured questions with respect to their property search, opportunities in the market, realities of market, available discounts and willingness to buy resale properties.
“No seller would like to get his property listed at a discounted price and hence initially I believed that there is no distress deal in the market. But then on the advice of the brokers, I decided to sit across the negotiation table for the resale market properties. Soon, I realized the desperation of the sellers and with my bargaining skills I could bring the prices 25% down,” says Rakshit Garg, a CA in Gurugram.
“I am conscious of the emerging market realities of job losses and salary cuts and desperation on part of the resale property owners. Since these people don’t have the holding capacity like the builders, they just want to offload the property, even if it means huge losses with price discounts and already paid bank interest,” maintains another buyer, Rajan Ghoshal, in Kolkata.
Survey Highlights
72% Indians believe distress sale is a market reality in real estate
68% buyers on property hunt are actually finding better deals in secondary market
52% buyers are getting the distress deals in the range of 15-25%
Buyers across the NCR and Kolkata market are witness to the maximum distress deals
Bengaluru and Pune market is witness to least distress sale
Only 24% Indians would pay slightly extra for brand new home
Any new apartment that costs more than 10% price of the resale property is not worth being invested for Indians
70% home buyers would buy resale property that is less than 3 years old
90% Indians demand only Ready to Move property in resale
74% Indians demand valuation metrics in housing market
Track2Realty also tried to find out whether the distress sale in the secondary market is compelling the builders to cut down the prices. 46% buyers find builders are ready to renegotiate the deal, even though the price discount may not be as much as with the resale property. The developers are trying to balance that price advantage through other means and value additions.
“I told this marketing head of Noida builder upfront that your quoted price of INR 69 lakh is way higher than the resale listed property in the same building quoting only INR 56 lakh. Initially he dismissed my claim saying that it might be one-off incident of initial buyer having bought in early bird scheme. But then he called me next week with an offer price of INR 60 lakh. One more week of silence and now he says you come with the cheque book and I will offer you a matching deal,” Ramesh Kumar, a buyer in Noida shares his experience.
This raises as fundamental question that whether the Indians across the large cities are no more fancying about a brand new home. To what extent they would shell out more money for a brand new apartment? The study finds that only 24% Indians would pay slightly extra for brand new home. More importantly, any new apartment that costs more than 10% price of the resale property is not worth being invested.
How much old property are Indians betting on in the resale market? 70% home buyers would buy resale property that is less than 3 years old. However, when it comes to play safe 90% Indians demand only Ready to Move property in resale.
“For me a 3 year old property is as good as the newly delivered ones. It is more tempting if the initial buyer has not stayed into the said house. As a matter of fact, around 2-3 years old property makes better sense today for many reasons – discounted price, having weathered teething troubles, established society, and easy to assess social profile of the complex,” points out Anamika Sharma in Mumbai.
The home buyers across the country nevertheless have a common dilemma – how to assess the fair price of the property? More than 7 out of 10, as many as 74%, demand valuation metrics in housing market to assess whether they are paying the right price, or actual discount, for the given property.
Track2Realty is an independent media group managed by a consortium of journalists. Starting as the first e-newspaper in the Indian real estate sector in 2011, the group has today evolved as a think-tank on the sector with specialized research reports and rating & ranking. We are editorially independent and free from commercial bias and/or influenced by investors or shareholders. Our editorial team has no clash of interest in practicing high quality journalism that is free, frank & fearless.
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