News Point: The Indian homebuyers don’t have fancy expectations of price crash or correction in 2017 after the demonetization and other policy changes.
Will the houses be cheaper post demonetization?- Will the curb on flow of black money make the bubble burst in the housing market?
- Will the over-supply lead to price crash or correction?
- Will the regulator force exit of investors and make the housing prices correct?
These are some of the questions that have been debated enough within the built environment of Indian real estate. However, the fact lies that the answer to these questions also depend upon the perspective of the home buyers whose wait & watch or impulse may have a direct bearing over the price correction apprehensions in the housing market.
On the eve of 2017, Track2Realty, the real estate think-tank group, conducted a nation wide survey and the answer is a clear ‘NO’ as far as the buyers’ expectations of cheaper houses in the year ahead is concerned.
A vast majority of homebuyers, as many as 74 per cent, dismiss the theory of recent policy changes leading to price correction in the housing market. Contrary to the price correction reports, the property search of prospective buyers and sellers across the country have convinced them that cheaper house in 2017 is a fancy and wishful thinking.
Those who have done their homework on property search are pretty sure about it. This is quite striking as more Indians dismiss the price correction expectations; compared to 2012 when without any policy changes, legislations and transparency, 70 per cent home buyers had refused to believe that home prices would correct.
“I rather feel there is an organised cartel spreading the news that property prices would correct; to keep the end users away from the market and the prices would rather go up this year. With more stringent laws there will be less supply in the housing market and hence property prices will only go up,” says Navneet Sharma, a home buyer in Noida.
Key findings
- 74% homebuyers dismiss the theory of recent policy changes leading to price correction in the housing market
- Compared to 2012 when without any policy changes, legislations and transparency, 70 per cent home buyers had refused to believe that home prices would correct, more home buyers rejected correction theory now
- 78% homebuyers who invested in second house and are planning to sell this year have been assured by the dealers & brokers for higher returns if they exit in the year ahead
- 78% believe that if they missed it now, they may not be able to buy it ever
- 68% repent investing in other instruments and wish they could have put the same money in buying a house
- 58% are not sure whether price correction would ever happen in the Indian property market
- 94% don’t find media reports on property market reliable
- 68% go for physical search & verification of the locality and the property, 20% hire a reliable broker, and the rest 12 per cent go by the references of friends & families
- 90% believe that even property search sites are biased in their valuation of the property
- 96% Indians believe that the market is and will continue to be sellers’ market
- 74% buyers believe that the benefits of even distress selling do not reach to the end-users since there are enough investors & speculators still operating in the market
Track2Realty conducted this survey in ten cities – Delhi-NCR, Mumbai, Pune, Bangalore, Kolkata, Chennai, Ahmedabad, Lucknow, Coimbatore and Hyderabad. A total number of 2000 prospective buyers & sellers in search of property prices were interviewed.
The property quest was put into 3 categories — seeking property up to the price range of Rs. 50 lakh, seeking a house up to the range of Rs. 1 crore and seeking upper segment house of Rs. 1 crore and above. Interestingly, the voice and market search of the prospective buyers & sellers in the all the three segments indicated the same results.
A majority of them, 74 per cent of the home seekers are convinced that they will have to shell more money to buy a house in 2017, as compared to the last few years. An equally high number of those, 78 per cent who invested in second house and are planning to sell this year have been assured by the dealers & brokers for higher returns if they exit in the year ahead.
In most of the cities home seekers’ property search indicates that the prices are only going to head northwards. 78 per cent believe that if they missed it now, they may not be able to buy it ever. 68 per cent repent investing in other instruments and wish they could have put the same money in buying a house.
Nearly six out of the 10 homebuyers, 58 per cent, are not sure whether price correction would ever happen in the Indian property market. Nearly four in five, 76 per cent, who went on a house hunt in the last three years, are disillusioned with the affordable houses advertised in the newspapers.
What is most interesting find of the survey is the fact that almost all the buyers, 94 per cent don’t find media reports on property market reliable. Nearly seven out of ten, 68 per cent, go for physical search & verification of the locality and the property. 20 per cent hire a reliable broker, and the rest 12 per cent go by the references of friends & families.
“There is no point to trust media reports as different media is reporting different price of the same property in the same locality. Even real estate websites are misleading. When my local property dealer takes me for a ride if I don’t cross check his advice with another one, how can I trust one-way communication of media,” questions Gautam Patel in Ahmedabad.
No less than 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 and portals different in the same locality? They are supposed to be based on the BSP of the developers,” questions Amrit Mohan, a home buyer in Thane.
A whopping 96 per cent of the Indians believe that the market is and will continue to be sellers’ market. 74 per cent of the buyers believe that the benefits of even distress selling do not reach to the end-users since there are enough investors & speculators still operating in the market.
