Nearly 50% homebuyers expect property prices to increase: Report

Services activity, hiring and stable unemployment rate helping consumer confidence, it says

Real estate remains India’s preferred asset class with nearly 50 per cent of customers expecting prices to increase and the economy to grow, said a survey’s report on Monday.

The survey by Housing.com and National Real Estate Development Council (NAREDCO) found that 47 per cent of respondents prefer to invest in real estate. As many as 21 per cent of respondents prefer to invest in the stock market, 16 percent in fixed deposits and 15 per cent in gold. It found that 48 percent of respondents anticipate real estate prices to rise.

"India's residential market has seen a sharp revival in demand after the second wave of the Covid-19 pandemic. The rising cost of borrowing, increase in input costs and strong demand has resulted in a rise in housing prices," said Dhruv Agarwala, group chief executive officer, Housing.com, PropTiger.com & Makaan.com.

Housing demand is expected to remain strong in the coming quarter on the back of strong consumer sentiment and the seasonal uplift in the festival season, he said.

Homebuyers are cautious but optimistic about the economic scenario, said the survey. Seventy-three percent of respondents feel that the economy would continue to grow. While global uncertainties have moderated the outlook, the sentiment regarding the economy remains well above the dip recorded in 2020.

The income outlook has reached an all-time high of 65 per cent since 2020. Strong services activity, optimistic hiring scenario and a stable unemployment rate have bolstered consumer confidence in their future earnings, said the report that surveyed a thousand respondents in the real estate market about Delhi NCR, Ahmedabad, Mumbai, Pune, Hyderabad, Bangalore, Chennai, and Kolkata.

“The residential markets across India remain upbeat despite growing concerns about rising interest rates. The stronger sales momentum anticipated in the coming months and quarters stems from the fact that property remains the best asset class as the latest Consumer Sentiment Outlook (Jul-Dec 2022) suggests that real estate has remained a favourite asset class among potential buyers,” said Rajan Bandelkar, president of NAREDCO. People's desire to own a home and their goal for financial security has strengthened housing sales over the past two years.  

This festive season will likely bring more deals favouring first-time homebuyers. With users remaining confident about the economy, the real estate sector will likely register a remarkable quarter, said Bandelkar.

The survey said that despite the hikes in property prices and interest rates, homebuyer sentiment will be positive in 2022.

“As for the repo rate, while the hike was imminent, it remains below the pre-pandemic levels of 5-6 percent. The confidence in future earnings coupled with the pandemic-induced importance of homeownership will continue to drive residential sales not only in the top metros but also in the Tier-II cities,” said Ankita Sood, head of research at Housing.com, PropTiger.com & Makaan.com.