53% of Affordable Housing Buyers Dissatisfied with Current Options
The ANAROCK-FICCI Homebuyer Sentiment Survey reveals that more than 50% of homebuyers in major cities are unhappy with the available affordable housing options. Key issues include poor location, subpar construction quality, and small unit sizes. Despite t
Affordable HousingReal EstateHomebuyer SentimentProperty MarketHousing SupplyReal Estate PuneOct 21, 2024
According to Anuj Puri, Chairman of ANAROCK Group, the top three reasons for this dissatisfaction are poor project location accessibility, questionable construction quality, and inadequate design, as well as constricted unit sizes. Of the dissatisfied home seekers surveyed, 92% cited project location as their primary concern, while 84% were deterred by low construction quality and poor design. Additionally, 68% found the available unit sizes too small to be attractive.
The decline in demand has led to a significant reduction in the supply of affordable housing. ANAROCK data shows that the share of affordable housing in new launches has dropped from 26% in 2021 to just 17% by the first nine months of 2024. Prior to the pandemic, affordable homes accounted for 40% of new projects.
Despite rising prices, bigger homes remain the preferred choice for buyers. Over 51% of the current survey respondents prefer 3BHK units, while only 39% opt for 2BHK options. The demand for 3BHKs is particularly high in Chennai, Hyderabad, Delhi-NCR, and Bengaluru, where over 50% of respondents favor these larger units. In contrast, over 40% of participants in Kolkata, MMR, and Pune prefer 2BHKs.
The survey also highlights a significant trend reversal in terms of construction stages. The demand ratio for ready-to-move-in homes to new launches now stands at 20 25, a stark contrast to the 46 18 ratio in H1 2020. This shift is largely attributed to the preference for projects by large and listed developers, who buyers trust to deliver on time.
Another key finding is the growing interest in rental income among residential real estate investors. At least 57% of investors are now focusing on steady rental income, driven by a remarkable surge in rental rates across cities in the past two years, particularly in prominent micro-markets where rates have risen by over 70%. This earning potential has become a major motivator for investment.
While interest in affordable housing continues to wane, premium and luxury homes are seeing increased demand. At least 45% of survey respondents now prefer homes priced above INR 90 lakh, compared to just 27% in the pre-Covid 2019 survey.
The survey also reveals a growing preference for residential plots, with 20% of property seekers considering them desirable options. This trend is most evident in major Southern cities, where 30% of buyers in Chennai, 29% in Bengaluru, and 27% in Hyderabad prefer residential plots. Several large developers have launched residential plot projects in these cities, finding a steady stream of buyers.
Villas and row houses are also gaining popularity in these southern cities. However, more than 70% of survey participants in MMR, NCR, and Pune still prefer apartments.
Other notable highlights from the survey include
- Real estate remains the most preferred asset class for investment, with 59% of respondents choosing it, up 2% from the previous survey.- 66% of millennials and 42% of Gen-X respondents plan to use their investment gains to purchase a home in the future.- Over 67% of buyers are seeking property for end-use, up from 64% in the H2 2023 survey.- Top homebuyer demands today include timely project completion, improved construction quality, and well-ventilated homes.
Frequently Asked Questions
What are the main reasons for homebuyers' dissatisfaction with affordable housing options?
The main reasons for dissatisfaction are poor project location accessibility, low construction quality, and inadequate design, as well as constricted unit sizes.
How has the demand for affordable housing changed in recent years?
The demand for affordable housing has declined significantly, with a drop from 26% of total launches in 2021 to just 17% by the first nine months of 2024.
What are the preferences for apartment sizes among homebuyers?
Over 51% of respondents prefer 3BHK units, while 39% are willing to settle for 2BHK options. The demand for 3BHKs is particularly high in Chennai, Hyderabad, Delhi-NCR, and Bengaluru.
What is the trend in the preferred stages of construction for homebuyers?
The demand ratio for ready-to-move-in homes to new launches has shifted from 46:18 in H1 2020 to 20:25 in H1 2024, reflecting a preference for projects by large and listed developers.
Why are residential plots gaining popularity in Southern cities?
Residential plots are becoming more popular in Southern cities like Chennai, Bengaluru, and Hyderabad, with several large developers launching projects that find ready buyers.
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