The real estate market in India continues to show resilience and growth, with over 59% of Indians choosing real estate as their preferred investment asset class. According to the Homebuyer Sentiment Survey H1 2024, released at the FICCI Real Estate Investment Summit in Mumbai on October 18, a significant portion of homebuyers—over 67%—purchase property for self-use, rather than for investment. This reflects the strong demand for homeownership, driven by a sense of security, stability, and long-term value.
Key Findings from the Homebuyer Sentiment Survey H1 2024:
The survey highlights crucial trends in Indian real estate, shedding light on the growing preference for larger homes, premium properties, and the cautious approach of investors due to rising property prices.
End-User Dominance: More than 67% of buyers are purchasing homes for self-use, a 3% increase from the previous survey in H2 2023. This shift underscores a focus on security and long-term living, especially in a volatile economic climate.
Investment in Real Estate: While end-use remains dominant, 33% of prospective buyers still view real estate as a valuable investment opportunity. However, rising property prices have led to a 3% dip in investment-focused purchases compared to last year.
Preferences for Luxury and Premium Homes: At least 45% of respondents now prefer homes priced above ₹90 lakh, indicating that premium and luxury segments are gaining traction. Buyers are increasingly looking for high-quality, durable properties that offer long-term value, even at a premium price point.
Demand for Larger Homes: The survey shows that 51% of respondents prefer 3BHK units, reflecting the need for more spacious homes, especially post-pandemic, where homebuyers seek better ventilation, more space, and improved construction quality.
Shift Away from Affordable Housing: Despite the government's push for affordable housing, more than 53% of homebuyers expressed dissatisfaction with affordable housing projects, citing concerns over location, construction quality, and unit sizes.
Impact of Mortgage Rates: The survey indicates that rising mortgage rates could significantly impact homebuying decisions. While rates below 8.5% have little effect, rates above 9% could deter up to 87% of potential buyers, signaling a potential slowdown in the housing market if interest rates rise further.
Investor Sentiment and Capital Gains:
Investors and Real Estate Indians Buy for Self Use are taking a more cautious approach in 2024, with a notable decline in investment-driven purchases. This shift is primarily due to the escalating real estate prices across major cities. However, some investors are still leveraging property investments to secure capital gains for entrepreneurial endeavors or to generate rental income. Rental values in prime markets have surged by 70% over the past two years, making property investment a viable option for those seeking consistent rental returns.
Demand for Ready-to-Move Homes Declines:
Interestingly, the demand for ready-to-move homes has dropped significantly, with a ratio of 20:25 between ready homes and new launches. This reflects a growing confidence in developers and the regulatory environment, particularly in the context of RERA (Real Estate Regulatory Authority) and its positive impact on ensuring timely project completion.
Preference for Apartments and Residential Plots:
While apartments remain the most preferred property type for 58% of buyers, residential plots are gaining popularity, especially in southern cities like Chennai, Bengaluru, and Hyderabad. At least 20% of prospective buyers are now considering investing in residential plots, highlighting a growing trend in plot-based developments.
City-Wise Preferences:
Chennai: 30% of buyers prefer residential plots.
Bengaluru: 29% of buyers show interest in plots.
Hyderabad: 27% of respondents prefer plots over apartments, reflecting the growing trend of independent housing options in South India.
Premium and Luxury Homes Continue to Rise:
For buyers with a budget of ₹45 lakh to ₹90 lakh, over 35% expressed interest in properties within this range. However, the premium and luxury segments are seeing substantial growth, with 45% of buyers preferring properties priced above ₹90 lakh. This trend underscores the rising demand for high-end residential properties, especially in metro cities.
Impact of Regulatory Frameworks:
During the FICCI summit, Pramod Rao, Executive Director of SEBI, emphasized the importance of transparency and governance in fostering investor confidence. The implementation of RERA has significantly improved buyer confidence in under-construction properties, resulting in a shift from ready-to-move homes to new projects.
Conclusion: The Road Ahead for Indian Real Estate:
India’s real estate sector is poised for tremendous growth, with the residential market projected to reach $1.04 trillion by 2029, growing at a CAGR of 25.6%. This growth is fueled by increased demand for premium homes, luxury apartments, and sustainable housing solutions.
Millennials, who make up a large segment of today’s homebuyers, are prioritizing quality, space, and long-term investment returns. This trend is expected to shape the future of real estate, as buyers seek properties that offer not just a home but a lifestyle investment.
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