Real estate has emerged as the most preferred asset class for investment but nearly 50 per cent of potential homebuyers, currently living on rents, feel that prices are still high and unaffordable for them to purchase flats, according to a survey by Housing.com and Naredco.
Housing.com, which is part of Elara Technologies that also owns PropTiger and Makaan.com, said the survey was conducted in April-May across eight cities through a random sampling technique. The insights presented in the survey entirely represent the view of more than 3,000 potential homebuyers.
According to the findings of the survey, real estate remains the preferred asset class for investment (35 per cent), followed by gold (28 per cent), fixed deposits (22 per cent) and stocks (16 per cent).
As many as 59 per cent of respondents think that the overall economic scenario will either remain at the current levels or may slightly see some revival in coming six months.
About 53 per cent are confident of income for the coming six months while the same percentage of respondents said that they have 'only postponed' their search for a home for the coming six months.
"Price-points of residential realty have remained muted for the past few years, but are still a key deterrent, with the perception of being still unaffordable. This was the response from nearly half of the potential homebuyers surveyed, who are currently staying in rented accommodation," the statement said.
The survey report "Concerned yet positive -- The Indian Real Estate Consumer (April-May 2020) reflects that prospective home buyers are "cautious but optimistic", said Dhruv Agarwala, the group CEO of Housing.com, PropTiger and Makaan.com in a video press conference.
"Survey shows that potential homebuyers who were searching for flats have pressed a pause button for the time being because of liquidity concerns and uncertainty over the COVID pandemic. But, a majority of them will gradually start returning to the market in the coming months," he said.
The survey has established again that credible developers and ready to move in or nearing completion properties are preferred by prospective customers, who are largely end-users, Agarwala said.
"With the significant correction in stock markets and the continued volatility, it is not surprising that real estate has become the top choice as an investment asset class," he said.
Naredco President Niranjan Hiranandani said, "The pandemic has not only shaken up the economy, it has further added to the distresses of real estate, which was already reeling under pressure post the Tsunamis of economic reforms, including demonetisation, GST and RERA. This pandemic has come as a rude setback for our industry and the allied sectors."
He said it is understandable that potential homebuyers have become cautious and postponed the decision to buy temporarily but the demand is slowly returning to the market.
Hiranandani said it is an ideal time to buy residential properties as interest rates on home loans are very low at around 7 per cent and also there is interest subvention for the affordable housing segment.
He stressed that the real estate sector needs to adapt to a tech-savvy future in terms of digital platforms for sales and marketing and also adopt enhanced automation at sites.
"As we prepare for opening up the economy in a phased manner, the industry will need enough financial cushioning to deliver homes as also get the industry back on its feet," Hiranandani said.
Rajeev Talwar, Chairman of NAREDCO and CEO at DLF, said, "While the sector recalibrates the approach to stay afloat in these challenging times, we are moving towards a more digitally inclined world. The overall behavior of the consumer has changed to save more, spend less and invest smart model."
Real estate has always been less volatile as compared to share markets making it the safest investment available, he said.
The preference of this new age home buyer has also changed owing to the crisis and it is imperative for builders to adapt to new technologies that will ease the entire home buying process, Talwar said.
Housing.com Director Research Ankita Sood said: "We delved into the renting predispositions of our customers and majority (47 per cent) of the consumers opined that they would want to buy a house but see it as an expensive proposition. However, they would be motivated to purchase a house for self if it is rightly priced."
According to the survey, a majority of respondents surveyed (73 per cent) comprise 'first time homebuyers', who are looking to buy a 'ready-to-move-in-house' for end-use and are from the age group of 25-45 years.
While 60 per cent of respondents opined that for the next six months, they would prefer a ready-to-move-in property, 21 per cent said they were okay with a property with a delivery timeline of maximum one year.