Mortgage Rates Above 9% Could Deter Homebuyers: FICCI-Anarock Survey
A joint survey by FICCI and Anarock reveals that nearly 90% of homebuyers will be significantly impacted if mortgage rates exceed 9%, while over 71% are indifferent if rates remain below 8.5%. The survey, conducted with 7,615 respondents, highlights the p
Mortgage RatesHomebuyersFicciAnarockReal EstateReal Estate NewsOct 18, 2024
The survey highlights that over 71% of respondents indicated that their home-buying decisions would remain unaffected if mortgage rates stay below 8.5%. However, if rates exceed 9%, then it will have a significant impact on over 87% of respondents. For rates between 8.5% and 9%, about 54% expect a moderate influence on their choice.
Among other findings, the survey found that real estate is the most preferred asset class for investment, with over 59% of respondents favoring it. The Indian residential market continues to be predominantly driven by end-users, with over 67% of survey participants buying properties for self-use.
The budget range of Rs 45-90 lakh continues to be the most favoured option for over 35% of prospective homebuyers. Currently, over 28% of survey respondents stated their preference for homes priced between Rs 90 lakh and Rs 1.5 crore.
Top homebuyer demands include timely project completion (98%), improved construction quality (93%), and well-ventilated homes (72%).
Pramod Rao, Executive Director of the Securities and Exchange Board of India (SEBI), emphasized the importance of regulatory frameworks in driving sustainable growth in the real estate sector. He highlighted SEBI's initiatives, such as a single dashboard data bank to streamline processes and efforts to convert real estate investments into tradable financial instruments, boosting liquidity and accessibility.
Sandip Somany, Past President of FICCI and Mentor of the FICCI Committee on Urban Development and Real Estate, and CMD of Somany Impresa Group, noted the significant shift in consumer preferences from ready-to-move homes towards under-construction properties. This trend reflects growing confidence in developers and the regulatory environment, particularly due to the introduction of the Real Estate (Regulation and Development) Act (RERA).
Raj Menda, Chairman of the FICCI Committee on Urban Development and Real Estate and Chairman of the Supervisory Board of RMZ Corporation, shared that India's economic growth is driving rapid expansion in the real estate sector. The residential market is projected to reach USD 1.04 trillion by 2029, growing at a 25.6% compound annual growth rate (CAGR). This growth is fueled by rising demand for ultra-luxury properties and significant investments.
Anarock Chairman Anuj Puri highlighted the importance of the consumer sentiment survey in gauging contemporary homebuyers' preferences and trends in the Indian residential real estate market.
Sanjay Dutt, Managing Director and CEO of Tata Realty and Infrastructure, discussed the significant evolution of the real estate sector, particularly the shift from traditional Real Estate Investment Trusts (REITs) to smaller-scale REITs (SM REITs). He emphasized the advantages of fractional ownership, noting how it allows investors to access high-quality assets with lower capital commitments, thereby democratizing real estate investment.
Gaurav Pandey, Co-Chairman of the FICCI Committee on Urban Development and Real Estate and Managing Director and CEO of Godrej Properties, stated that institutional investors are increasingly focused on wealth creation through the development of better-quality products in the real estate sector. He highlighted the distinct growth stories of various cities, noting that Pune stands out as a frontrunner in this regard. Pandey also emphasized that sustainability has become a critical priority for all large developers, reflecting a collective commitment to responsible and eco-friendly practices.
Vipul Roongta, Co-Chairman of the FICCI Committee on Urban Development and Real Estate and Managing Director and CEO of HDFC Capital Advisors Ltd, underscored the critical importance of investing in skilled labor and workforce development to drive progress. He also emphasized the essential role of the private sector in creating impactful, scalable solutions to meet the growing demand in the industry.
Frequently Asked Questions
What percentage of respondents will be significantly impacted if mortgage rates exceed 9%?
Nearly 90% of respondents feel that their decision to buy residential properties will be significantly impacted if mortgage rates exceed 9%.
What is the most preferred budget range for homebuyers according to the survey?
The budget range of Rs 45-90 lakh continues to be the most favoured option for over 35% of prospective homebuyers.
What are the top demands of homebuyers as per the survey?
The top demands of homebuyers include timely project completion (98%), improved construction quality (93%), and well-ventilated homes (72%).
What is the projected growth of the Indian residential market by 2029?
The residential market is projected to reach USD 1.04 trillion by 2029, growing at a 25.6% compound annual growth rate (CAGR).
What initiatives is SEBI taking to boost the real estate sector?
SEBI is focusing on initiatives like a single dashboard data bank to streamline processes and efforts to convert real estate investments into tradable financial instruments, boosting liquidity and accessibility.
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