The months before the festive season are generally lull for the property market. Indians are mentally wired to buy the high valuables on the auspicious dates during the festivals. However, this seems to be changing in the property market this time around, as economic rationale indicates preference over religious beliefs. The vast majority of the home buyers anticipate price appreciation during the festive season.
70% Indians are apprehensive of cost escalation this festive season. A large share of them, as many as 78% believe the appreciation would be in the range of 10-12%. Among prospective home buyers, many are negotiating with the builder to freeze the price beforehand, only to make the final formalities during the festivals. More than half of buyers having zeroed on the property, as many as 58%, have finalized the deal much before the inauspicious shraadh begins.
These are the findings of a pan-India survey by Track2Realty, the real estate thinktank group. Track2Realty conducted this survey between August 20 to September 5 to gauge the mood of the home buyers ahead of the festivals. The survey was conducted in 10 cities – Delhi, Noida, Gurugram, Mumbai, Pune, Ahmedabad, Bengaluru, Hyderabad, Chennai and Kolkata.
The survey delved deeper into the consumer psychograph of the home buyers to assess their buying intentions as well as outlook towards the real estate as an asset class to invest. The survey found that even though a vast majority of the home buyers, 82% to be precise, point out that the affordability curve has gone way too high, they still feel appreciation is there on the cards.
“I have negotiated the price with the builder, as my trusted broker informed me that the prices would escalated to INR 500 during the Navratra. For a 1000 sq feet of 2BHK apartment, that is an extra cost of INR 5 lakhs. So, I have made the commitment and paid a token amount of INR 1 lakh. The buying formalities and the paper work will be done either during Navratra or Dhanteras,” says Sumedha Shukla, a 32-years-old media professional in Noida.
The question is whether there is any room for price appreciation in the overheated and competitive property market of India? 64% Indians feel in the present economic uncertainties post Covid, property has emerged as the safest parking lot of conservative Indians who still see stock market returns as gambling with higher degree of risk associated.
There is a general feeling across the investors that stock market is way too volatile and hence property and gold are the safest bets. 78% Indians are apprehensive of stock market volatility and would avoid high risk for high returns.
There is a general feeling among the Indians that even in the wake of a slowdown in India borne out of global recession the asset class that will show maximum resilience would be property. 80% Indians feel property may not have given the highest returns in the past but has never grown at a lesser pace than inflation.
“I am investing in my second home now and am still wondering whether to make a commitment now or wait for the festive offers. The friends and family that I have spoken to caution me that instead of festive offers there might be a price hike this festive season. As an investor looking for both capital gains and rental returns, I feel property and gold are the safest bet, and in the long run CAGR returns would be in the double digit. More importantly, my investments are safe, compared to any other financial product,” says Suresh M, a 48-years-old textile entrepreneur in Bengaluru.
Which are the segments of property that would be witness to max price hike? Well, a vast majority of the Indians, 82% feel it is the luxury housing that would be witness to more price hike. Affordable housing would be least affected in terms of the festive spirit property price hike, maintain as many as 70% home buyers.
“In a price sensitive affordable housing, there is not much scope of price hike. Any hike of even INR 200 PSF would dent the buying intentions of a majority of the buyers. In contrast, the luxury buyers have the financial flexibility and they look for value proposition rather than saving a few lakh rupees here and there. I feel luxury housing and commercial properties might see sizable appreciation this festive season,” maintains Kaushal Soni, a 32-years-old IT employee in Mumbai.
Wouldn’t it be counter intuitive to economic rationale that the developers would hike the property prices at a festive time when the buyers look for discounts & freebies? A vast majority of the Indians don’t think so. They rather believe that, 62% said so, with less ready to move inventory the developers are no longer as desperate as they were a few years back with standing inventory bothering their respective balance sheets.
56% Indians are expecting more new launches this festive season. 66% Indians even believe that with the economic uncertainties and insecure job market there might be lesser transactions, in terms of volume, but the value (read value/price) would definitely go up.
The resilience of the Indian property market during the global pandemic seems to have instilled the confidence of the investors into the property landscape. What comes out as a surprising perception among the Indians is the fact that they believe if there is recession in the US or China, it will rather boost the Indian property market.
60% of the survey respondents even maintained that with the global investors pumping money into the Indian property market, the returns in the property market are expected to be way higher than any other asset class.
Which are the cities where the Indians believe price appreciation would be highest this festive season? Mumbai was voted as the place to witness maximum appreciation with 80%respondents feeling so, followed by Kolkata with 72% respondents and Noida 68% respondents.
“Even in the worst global recession in the US leading to housing foreclosure over there, the Indian property prices had not gone down. As a matter of fact, it continued its upward momentum, though rather slowly, when the other investment products were giving panic to average Indians. A price hike during this festive season might bring the buyers into the market ahead of the festivals; those Indians who are invested in property do wish for the prices to appreciate,” sums up an upbeat home buyer, Rajesh Kalra, a 54-years-old Chartered Accountant in Gurugram.
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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