PremiumDeciding to buy a house, especially your first one, is perhaps one of the biggest decisions you will make in your lifetime. However, covid-19 has disturbed or changed these plans of many prospective homebuyers who were planning to buy a house around this time.
A survey by magicbricks.com, a real estate portal, titled “Property Buyer Sentiment Survey", states that, “about a third of buyers are wanting to put their purchase plans on hold and as many as 75% respondents are planning to decrease their budget for home buying." Close to 1,900 respondents from across the country, aged between 24-67 years, participated in the survey, which was conducted online in the second half of April 2020. The respondents were selected from among the users of the Magicbricks who have recently conducted property searches on its portal or app.
The main reasons for the change in the mindset of homebuyers is the host of challenges related to price discovery and job stability. More than 50% of the respondents cited these factors as reasons for deferring their buying plans.
According to analysis by Magicbricks, property prices have decreased by 2-9% across Indian cities. Cities like Hyderabad and Ahmadabad, which witnessed high year-on-year growth, were most heavily impacted by covid-19. Also, given that the prices had already rationalised due to the decline in April 2020, now that the lockdown has been further extended, prices are expected to decline further. A report released by Knight Frank yesterday said that property prices in Mumbai are expected to decline by 5% this year and 3% in the next year. (Read more about it here https://bit.ly/3bf3Myl).
However, homebuyers are anticipating much higher cuts in property prices compared to what various reports indicate. The price discounts expected by the Magicbricks survey respondents due to covid-19 ranged between 10% and 25%. Once lockdown is lifted, homebuyers will only return to market if they find prices being cut in accordance with their expectations. According to Magicbrick’s, price discovery is likely to be challenging after the pandemic, as there is going to be a lack of consensus between buyers and sellers regarding prices in the negotiation of property deals.
Demand for ready-to-move-in houses is getting stronger. Of the respondents to the Magicbricks survey, 84% want ready-to-move in properties. Another consumer sentiment survey conducted by Anarock Property Consultant also revealed that ready-to-move-in homes have been the preferred choice of end-users in the recent past. The preference for well-reputed and organized developers, with the least project execution risk, has also been on the rise.
The Magicbricks survey observed that the Gen Z (people born in the 90s) are the first ones to turn away from the property market, with 50% either putting on hold or dropping their plans to invest in property. However, the Anarock survey found that millennials are the key demand drivers. Their preferences are now dictated by the prevailing uncertainties, stock market volatility and financial sector incidents of the recent-past.
Even if they prefer buying over renting, for many young professionals, the option might not be available anymore. Given the jobs and pay hikes have been impacted by the covid-19 crisis, it's not surprising that many are putting big plans like buying a home on hold.
