Track2Realty Exclusive: Home buyers across the country find the reports of price appreciation a manipulative marketing myth. They blame a strong cartel of brokers/underwriters responsible for artificial appreciation which does not have any market logic. What comes as a bad news for the developers and promises to redefine the market dynamics of the real estate is the fact that buyers’ awareness has caught on the market manipulation that appreciates property prices unreasonably. It also indicates the marketing strategy of the realty companies is not grounded while operating in an eco system of brokers/underwriters to absorb the artificial appreciation.
Eight out of ten Indians, 82 per cent, say the reports of price appreciation is artificial as they can’t get chance to exit with even 50 per cent of the appreciation that is being reported. Nearly as many, 78 per cent buyers believe it is safer to look for end-users wanting to exit in new projects than getting into a cartel of developers/brokers who keep appreciating the price even when transactions are not happening. A large number of home buyers & property seekers across the country do understand the role of underwriters in the realty market, as many as 60 per cent.
These are findings of pan-India survey by Track2Realty, the real estate market tracker. The home buyers across the country nevertheless believe, as many as 66 per cent, real estate will continue to be a sellers’ market due to the channel of black money in to the economy in general and sector in particular. More than half of the respondents, 52 per cent miss the absence of professional agencies for due diligence which could give them a genuine report of the property price with other hidden risk factors.
Track2Realty conducted this survey in ten cities-Delhi, Mumbai, Kolkata, Bangalore, Chennai, Bhopal, Lucknow, Patna, Jaipur and Pune between August 12 and 27. A structured questionnaire that was based on the understanding of realty market & its eco system, price appreciation in the given city, satisfaction index with appreciation and affordability was given to respondents who were mostly mid segment buyers with price sensitive to property as an investment choice.
A large section of respondents question, 63 per cent, if the reported appreciation of the property is a reality, how come it is not reflecting in the rental yields of the said property. 54 per cent of the respondents assert this artificial appreciation is the reason why developers in India are reluctant to get into rental housing. Nearly half, 48 per cent, maintain had the developers been serious with the rental housing, they could have got the policies done in their favour. 57 per cent of the respondents assert it is not the policies that is coming in the way of rental housing, but the overt greed of the developers to launch and sell the projects instantly.
However, nearly everyone is convinced, 88 per cent, that the cycle of black money is so deep rooted in the realty business that the existing or proposed legislation won’t be able to wipe it out. Nearly seven out of ten, 68 per cent, demand the data of home buyers to be made public so that cartel of black money could be checked. However, a large number of respondents, 32 per cent, are of the view that the investors have such large cartel that it is not difficult for them to book property with different names.
Trust quotient of the brokers was found to be pretty low across the country as they are seen as catalysts of price appreciation. A very small section of Indians, only 28 per cent of the survey respondents found them reliable. A large number 52 per cent found them highly unreliable and not worth doing business, while 20 per cent maintained it depends on what kind of broker you come across.
Nearly two third of the respondents, 63 per cent, crib that it is not easy to get the flat of their choice in any apartment which has been the forte of underwriters, even if they are ready to pay the PLC charges. Nearly half the respondents, 45 per cent of the respondents allege that the brokers ask for extra commission as cash component to ensure them their preferred location of the flat. Similarly, a large number of respondents, 35 per cent blame brokers to exceed their brief and not go by the builder-buyer agreement.
More than half, 54 per cent, blame as much to the broker as to the developer for artificial appreciation of the property. As many as eight out of ten Indians, 82 per cent, say unless the brokers are regulated real estate market can not be cleaned as they are the catalysts & perpetuators of artificial appreciation.
Methodology
The survey demography belonged predominantly to the middle and upper middle class of society, being educated professionals and a significant number of respondents were end-users. Majority of these buyers were first time buyers who wanted a new house for self-use. While 63 per cent of the buyers had to live in these houses, 25 per cent had investment in mind and rest 12 per cent wanted to exit from the house for various reasons, ranging from dissatisfaction to affordability issues.
A total sample size of 2000 home buyers was targeted. Out of these 1764 samples were finally zeroed down and considered for analysis. Rest 236 respondents were not considered for evaluation since they either gave incomplete questionnaires or were rejected for non-seriousness of their choices & concerns.
The total sample size had 38 per cent females and 62 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 handed over the questionnaire to the respondents to be filled and returned the next day. 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 21 questions and the answers were grouped into nine key factors of understanding & concerns and sensitivity to price & their index of reasoning. The survey found that the primary concern of the home buyers has been artificial appreciation, yet the buyers were apprehensive of any correction and feel it will always remain the sellers’ market.
