Affordable Housing Sinks: ANAROCK-FICCI Survey Reveals Buyer Discontent
The latest ANAROCK-FICCI Survey highlights a growing dissatisfaction among affordable housing buyers, pointing to issues like poor accessibility, low-quality construction, and cramped unit sizes. This trend calls for a major rethink in the real estate sec
Affordable HousingReal EstateProperty DemandAnarockficci SurveyHomebuying TrendsReal EstateOct 21, 2024
Looking to buy a house but unable to close a deal? This trend, highlighted by the latest ANAROCK-FICCI Survey, serves as a wake-up call for the real estate sector to rethink its offerings and strategies to revive sales. The survey reveals why buyers are increasingly dissatisfied.
According to the survey, 53% of affordable housing buyers are unhappy with the available options. Key reasons include poor project location accessibility, low-quality construction, and small unit sizes, which are major deterrents for affordable housing seekers.
Bigger Homes in Demand
Bigger homes continue to dominate demand in H1 2024, with 51% of property seekers preferring a 3BHK, according to the survey results. However, the 2BHK remains popular, with 39% of respondents opting for this setup.
Declining Demand for Ready-to-Move Homes
A significant trend reversal noted by the survey is the declining demand for ready-to-move homes. The survey results point to the ratio of ready homes to new launches shifting to 20 25, compared to a much higher 46 18 in the first half of 2020. The change is driven by homebuyers favoring projects from large, listed developers, confident they will deliver on time.
Rising Rental Income
Additionally, 57% of residential property investors are focused on steady rental income, which has surged across cities due to rising rental rates—up by over 70% in prominent micro-markets.
Growing Demand for Higher-Priced Homes
Demand for homes priced between ₹90 lakh and ₹1.5 crore has also grown, with 28% of respondents preferring this range, up from 18% in the pre-COVID period.
Residential Plots Gaining Popularity
The survey also notes that residential plots are gaining popularity, particularly in southern cities. Around 30% of buyers in Chennai, 29% in Bengaluru, and 27% in Hyderabad prefer plots. Villas and row houses are also in high demand in these cities, while apartments are the top choice for over 70% of respondents in the Mumbai Metropolitan Region (MMR), the National Capital Region (NCR), and Pune.
Decline in Affordable Housing Demand
The survey highlights a sharp decline in demand for affordable homes since the COVID-19 pandemic, driven by the financial impact on this segment’s target clientele.
Anuj Puri, Chairman of ANAROCK Group, explains, “The top three reasons why prospective affordable homebuyers are dissatisfied 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 issue, 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.”
Shrinking Supply of Affordable Housing
The survey says that the declining demand for affordable housing has had a cascading impact on its supply in the last one year. As per the ANAROCK data, the supply of affordable housing in major cities is shrinking, dropping from 26% of total launches in 2021 to just 17% by 9M in 2024. Before the pandemic in 2019, affordable homes made up 40% of new projects.
Preferences for Larger Homes
“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.”
Strong Demand for Premium Homes
While affordable housing continues to lose traction, demand for premium and luxury homes remains strong. At least 45% of respondents now prefer homes priced above ₹90 lakh, compared to just 27% in the survey’s pre-COVID 2019 edition.
Other Survey Highlights
- Real Estate Investment Real estate is the most preferred asset class for investment for over 59% respondents, up 2% against the previous survey.
- Future Home Buying 66% millennials and 42% Gen-X respondents will use their investment gains for purchasing a home in the future.
- End-Use Buyers Over 67% buyers seeking property for end-use vs 64% in H2 2023 survey.
- Top Homebuyer Demands Timely project completion assurance, construction quality improvement/assurance, and well-ventilated homes.
ANAROCK Group A Leading Real Estate Consulting Firm
ANAROCK Group is a leading real estate consulting and services company that provides comprehensive solutions for the real estate sector. With a focus on market research, advisory services, and analytics, ANAROCK supports developers, investors, and policymakers in making informed decisions. The company's expertise spans residential, commercial, and industrial real estate markets across India.
Frequently Asked Questions
What are the main reasons for dissatisfaction among affordable housing buyers?
The main reasons for dissatisfaction among affordable housing buyers include poor project location accessibility, low-quality construction, and small unit sizes.
What is the current demand trend for 3BHK and 2BHK homes?
51% of property seekers prefer 3BHK homes, while 39% opt for 2BHK homes.
Why is the demand for ready-to-move homes declining?
The demand for ready-to-move homes is declining because homebuyers are favoring projects from large, listed developers, who they trust to deliver on time.
What is the trend in rental income for residential properties?
Rental income for residential properties has surged across cities, with a rise of over 70% in prominent micro-markets.
How has the supply of affordable housing changed over the years?
The supply of affordable housing in major cities has shrunk from 26% of total launches in 2021 to just 17% by 9M in 2024.
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