First-time buyers, many of them on rent, drive home sales in NCR market

Mumbai residents search for larger units; end-users corner 90 per cent of overall homes sales

As the Covid-19 pandemic continues to keep people confined at home, a large section of residents in the national capital region who were staying on rent, are now looking to own properties. A recent report from real estate analyst firm Anarock shows, since the lockdowns forced people to work from home, first time homebuyers have flocked the market.

In the nine months between last July and March-end this year, a staggering 85 per cent of homebuyers in the NCR market were first-time buyers. The trend in NCR, where rents are lower than the largest market Mumbai, is particularly skewed towards moving to owned homes from rented apartments. In this period, some 21,750 residential units were sold in NCR.

In the Mumbai Metropolitan Region (MMR), the picture is quite different. During the same period in MMR, 65 per cent of the 47,140 homes bought were by home owners who upgraded to larger houses, compared with only 15 per cent in NCR. According to Anarock, smaller average size of residential units in MMR, compared to NCR led to this huge difference in the number of upgrades. In MMR, while the average size of residential units is 950 sq ft, in NCR its 1,250 sq ft.

According to Niranjan Hiranandani, national president, Naredco, the value of owning a home has risen hugely in the Covid period where trend of ‘renters’ turning into first-time home buyers has been on uptick. “This momentum is keeping the pace on grounds of fiscal and personal security, along with the stability housing offers during unprecedented crises”.

"In the pre-Covid era in MMR, the need to live closer to workplaces in areas in and around the pricier central business district areas prompted many buyers to opt for compact configurations. However, post-Covid, in the new hybrid and work-from-home environment and with various infra upgrades, the peripheral areas have also become attractive. Many homebuyers upgraded to larger homes in non-central locations,” said Anuj Puri, chairman, Anarock Property Consultants.

While in the NCR, where average property sizes start from a much higher base, more first-time homebuyers entered the housing market. “Moreover, it attracts first-time buyers from many neighbouring cities as well”, he said. In the MMR, the spurt in sales of larger units was also backed by reduction in property rates, a limited-period stamp duty cut and attractively low home loan interest rates.

In MMR, while WFH culture led homebuyers upgrade to two to three bed-room apartments from one-room sets, in NCR, affordable options attracted more first-time homebuyers to respond to the new pandemic-driven demand for homeownership. In fact, out of some 69,000residential units were sold two of the country’s largest housing markets, 90 percent were purchased by end-users for immediate consumption. Only 10 percent of those units were bought by investors during the period.

“While the pandemic also saw investors prefer real estate over paper-based volatile asset classes, as the actual home buying during the last year has largely been by end-users”, said Hiranandani. Reduction of stamp duty rates in Delhi, boosted the market sentiments, he said.