Future home buyers expect house prices to rise

• Real estate tops the list as the preferred asset class for 47% of respondents.
  
• About 58% of home buyers, mainly end users, are looking for a ready-to-move (RTMI) properties.
  
• House prices rose by 7% year-on-year in the April-June quarter of 2022.

Real estate is India’s most preferred asset class for investing in Indiaaccording to a Housing.com and NAREDCO survey released Monday. According to the survey, nearly 50% of potential customers expect prices to rise in the coming months due to strong demand during the holiday season.

Housing.com, one of India’s full-stack prop-tech platforms, and NAREDCO (National Real Estate Development Council) conducted a joint survey of more than 1,000 participants to gauge consumer confidence and released the report ‘Residential Realty Consumer Sentiment Survey H2 2022’ out.

According to the survey results, 47% of respondents prefer real estate investment, the highest compared to other asset classes such as stocks, gold and fixed deposits. The data shows that 21% of respondents prefer to invest in the stock market, 16% in fixed deposits and 15% in gold. House prices rose by 7% year-on-year in the April-June quarter of 2022.

“The housing market in India has seen a strong rebound in demand following the second wave of the Covid-19 pandemic. Rising costs of borrowing, rising input costs and strong demand have led to a surge in house prices,” said, Dhruv AgarwalaGroup CEO, Housing.com, PropTiger.com and Makaan.com

Homebuyer sentiment has been significantly boosted by the increased importance of home ownership, the need for additional space amid hybrid work policies adopted by many businesses, and the need for safety and security. The survey found that 58% of home buyers, who are primarily end users, are looking for turn-key (RTMI) homes.

“The real estate sector in India is witnessing green shoots of recovery, thanks to several policy interventions carried out by the government, which are helping the real estate sector grow and ensure a rapid recovery of the sector after Covid,” it said. Rajan BandelkarChairman, NAREDCO.

Will the increase in repo rate deter home buyers in India?

Residential markets across India remain optimistic despite growing concerns about rising interest rates. The expected increase of RBI 50 basis point repo rate won’t stop homeowners from buying property in India, says Ankita Soodhead of research at Housing.com.

The repo rate is as of now at 5.4% and the RBI could raise rates by 50 bps at the upcoming policy meeting this week.

“While the increase was imminent, it remains below the pre-pandemic level of 5-6%. Confidence in future earnings, coupled with the pandemic-induced importance of home ownership, will continue to drive home sales not only in the top metros, but also in Tier-II cities,” Sood added.

According to the Housing.com-NAREDCO report, the income outlook continues to improve, reaching an all-time high of 65% since 2020.

Falling interest rates have been a major reason for the massive increase in housing demand over the past two years. Also, the pandemic has restored the importance of owning physical assets such as real estate. This time, the resurgence in demand has even included the previously rent-friendly millennials – who are still in the housing market,” Anuj Puri, Chairman – ANAROCK Group.

Digital sales and marketing platforms have become the mainstay not only for home searching, but also for closing deals online or in just one or two site visits. The survey shows that 34% of homebuyers say they are willing to buy a home entirely online or just after one on-site visit.

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