The affordable housing market is facing significant obstacles as a result of the Covid-19 pandemic, with buyer demand falling. According to the most recent ANAROCK-FICCI Homebuyer Sentiment Survey - H1 2024 which gathered responses from 7,615 participants in 14 cities between January and June 2024, 53 per cent of prospective homebuyers are dissatisfied with the available options in this important category.
Anuj Puri, Chairman of ANAROCK Group, states: “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, a whopping 92 per cent identify project location as the biggest issue, while 84 per cent cite low construction quality and inferior design as major deterrents. 68 per cent find the available unit sizes too small to be attractive.”
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The survey highlights that declining demand for affordable homes has led to a reduction in supply over the past year. ANAROCK’s data shows that affordable housing launches have dropped from 26 per cent in 2021 to just 17 per cent by the end of September 2024, compared to 40 per cent in 2019.
“Bigger homes continue to dominate buyer preferences despite spiralling prices,” says Puri. He further added, "51 per cent of respondents prefer 3BHK units, especially in cities like Chennai, Hyderabad, Delhi-NCR, and Bengaluru. Conversely, in Kolkata, MMR, and Pune, 39 per cent lean towards 2BHK options."
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Shifting Trends in Home Preferences
Buyers' preferences for development stages have changed significantly, according to Anarock. The current demand ratio for ready-to-move-in homes vs. new releases is 20:25, which is considerably lower than the 46:18 ratio in H1 2020. This implies an increasing preference for projects by well-known developers, which boosts faith in timely delivery.
As demand for affordable homes declines, the appeal of premium residences grows. Around 45 per cent of respondents want homes priced higher than INR 90 lakh which is up from 27 per cent in the pre-Covid 2019 survey.
Another noteworthy finding is the rising demand for residential plots, with 20 per cent of buyers showing interest mostly in Southern cities. In Chennai, 30 per cent prefer plots, followed by 29 per cent in Bengaluru and 27 per cent in Hyderabad. Villas and row houses are also gaining traction in these areas, while more than 70 per cent of respondents in MMR, NCR, and Pune still favour apartments.
It's interesting to note that the survey also shows that 57 per cent of buyers of affordable housing are concentrated on acquiring properties as sources of rental income, despite their discontent with the market. Given the rising rental prices in important markets, this trend highlights a strong interest in real estate investing.
