COVID-19 impact – Potential homebuyers press pause button for 6-12 months

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According to ‘concerned yet positive – The Indian Real Estate Consumer (April – May 2020)’ report, real estate (35%) is still perceived as the preferred mode of investment, followed by gold (28%); fixed deposits (22%), stocks (16%).

Potential homebuyers who have been scouting for homes have pressed a pause button for six to 12 months because of liquidity concerns and uncertainty over the COVID pandemic but a majority of them will gradually start returning to the market in the coming months, a new survey has said.

Price-points of residential realty have remained muted for the past few years, but are still a key deterrent, with the perception of being still unaffordable. This was the response from nearly half of the potential homebuyers surveyed, who are currently staying in rented accommodation, a survey by Housing.com and Naredco titled Concerned Yet Positive – The Indian Real Estate Consumer (April – May 2020) has said.

It noted that real estate (35%) is still perceived as the preferred mode of investment, followed by gold (28%); fixed deposits (22%), stocks (16%); and homebuyers are likely to slowly return to the market in the coming six months, it said.

The real estate consumer remains positive with regard the economic scenario and income stability for the coming six months, it said.

As many as 59 percent of respondents think overall economic scenario will either remain at the current levels or may slightly see some revival in coming six months. As many as 53 percent of respondents confident of income for the coming six months but the rest were not too sure. Another 53 percent of the respondents have ‘only postponed’ their search for a home for the coming six months, the survey said.

A majority of respondents surveyed (73%) comprise ‘first time homebuyers’, who are looking to buy a ‘ready-to-move-in-house’ for end-use and are from the age group of 25-45 years. While 60 percent of respondents were of the view that for the next six months, they would prefer a ready-to-move-in property, 21 percent said they were okay with a property with a delivery timeline of maximum one year.

No GST and an aversion to project delays makes ready-to-move-in projects more lucrative for homebuyers, the survey said.

It also noted that right price with added discounts and credibility of developer have been ranked the highest driving factors to close the purchase.

The survey was conducted in April and May 2020, through a random sampling technique for a fair representation across regions. The insights presented in the survey entirely represent the view of more than 3,000 potential homebuyers.

Going forward, NAREDCO believes, real estate will be ‘positive’ for both end-users and investors in the post-COVID-19 world. Those living in rental homes have realized the importance of being in their own homes while NRIs facing challenging times in their present domiciles are looking at creating a safe haven ‘back home’ in India. Demand for additional space for home offices is on the rise, with need for more efficient layouts.

The pandemic has not only shaken up the economy, it has further added to the distresses of real estate, which was already reeling under pressure post the Tsunamis of economic reforms, including demonetization, GST and RERA. This pandemic has come as a rude setback for our industry and the allied sectors, said Niranjan Hiranandani, Founder-Chairman, Hiranandani Group and CMD, Hiranandani Communities and National President – NAREDCO.

He said it is understandable that potential homebuyers have become cautious and postponed the decision to buy temporarily but the demand is slowly returning to the market.

“Our survey clearly shows that potential homebuyers who were searching for flats have pressed a pause button for the time being because of liquidity concerns and uncertainty over the COVID pandemic. But, a majority of them will gradually start returning to the market in the coming months,” said Dhruv Agarwala, Group CEO, Housing.com, Makaan.com and PropTiger.com

While the sector recalibrates the approach to stay afloat in these challenging times, we are moving towards a more digitally inclined world.

“The overall behaviour of the consumer has changed to save more, spend less and invest smart model, said Rajeev Talwar, Chairman, NAREDCO and CEO, Director DLF Limited.

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