Property buying trends: 53% affordable home buyers unhappy with available options; bigger homes dominate buyer preferences

The demand for affordable housing has plummeted since the onset of Covid-19, primarily due to the financial impact on the target clientele of this market segment. However, the ANAROCK-FICCI Homebuyer Sentiment Survey - H1 2024 has revealed additional concerns. A significant 53% of homebuyers are unhappy with the currently available options in this crucial segment across various cities.
Here are key findings from the ANAROCK-FICCI Homebuyer Sentiment Survey.

Anuj Puri, Chairman - ANAROCK Group, says, "The top three reasons why prospective affordable homebuyers' disenchantment with the currently available affordable housing supply are bad project location accessibility, questionable construction quality and poor design, and constricted unit sizes. Of the dissatisfied affordable home seekers polled in our survey, a whopping 92% respondents identify project location as the biggest grouse, while 84% state low construction quality and inferior design elements as major deterrents. 68% respondents find the available unit sizes too small to be attractive."

The demand for affordable housing has significantly decreased in the past year, causing a ripple effect on its availability. According to ANAROCK data, the proportion of affordable housing in major cities has plummeted from 26% of total launches in 2021 to just 17% by 9M 2024. This marks a substantial decline from the pre-pandemic level of 40% in 2019.

"Bigger homes continue to dominate buyer preferences despite spiralling prices in the last one year," says Puri. "Over 51% of the current survey respondents prefer 3BHK units and just 39% will settle for 2BHK options. City-wise analysis indicates that the demand for 3BHKs is particularly high in Chennai, Hyderabad, Delhi-NCR, and Bengaluru, where over 50% respondents prefer it over other flat sizes. Conversely, over 40% participants in Kolkata, MMR and Pune name 2BHKs as their preferred option."

In the H1 2024 survey, there has been a significant shift in the preferred stages of construction. The ratio of demand for ready-to-move-in homes to new launches is now at 20:25. This is a reversal from H1 2020 when the ratio was 46:18. One of the main reasons for this change is that most homebuyers are now leaning towards projects by well-established and publicly listed developers, whom they trust to complete their homes on schedule.

The H1 2024 survey revealed that a significant 57% of residential real estate investors are prioritizing consistent rental income. This comes as no surprise, given the substantial increase in rental rates in various cities over the past two years, with some prominent micro markets experiencing a surge of over 70%. As a result, the potential for rental earnings has become a primary driving force for investments.
The demand for affordable housing is decreasing while there is a growing preference for premium and luxury homes. In a recent survey, it was found that at least 45% of respondents now favor homes priced above Rs 90 lakh. This is a significant increase from the pre-Covid 2019 edition of the survey, where only 27% of respondents showed interest in properties in or above this price bracket.

The most recent survey also shows an increasing preference for residential plots, with 20% of property seekers considering them as desirable options in various cities. City-specific data reveals that this preference is particularly strong in major Southern cities, with 30% of buyers in Chennai, 29% in Bengaluru, and 27% in Hyderabad expressing a preference for residential plots. A number of well-known and reputable developers have introduced residential plot projects in these cities over the past few years and are still finding eager buyers.

Villas and row houses are highly sought after in the southern cities. On the other hand, over 70% of survey participants in MMR, NCR, and Pune have a preference for apartments.