Big is Beautiful

While large spacious homes were in demand in 2023,  the bigger is better mantra continues to drive the housing market, with 50 percent of the home buyers preferring larger homes.

According to a recent Ficci-Anarock Consumer Sentiment Survey, the highest homebuyer demand is now for 3BHKs with at least 50 percent of homebuyers opting for this size. As many as 38 percent of home seekers look for 2BHK  units . The demand for 3BHKs in H2 2022 stood at 42 percent. Despite increasing property prices, the demand for bigger apartments continues unabated and is, in fact, increasing. 3BHKs are particularly in vogue in Bengaluru, Chennai, Hyderabad, and Delhi-NCR. In hyper-price MMR, 44 percent home seekers prefer 2BHKs. The demand for 1BHK units is being primarily evident in the western markets of MMR (17 percent) and Pune (10 percent).

Aligned to the growing preference for bigger apartments, the demand for luxury homes priced  over INR 1.5 Cr has also gained more traction. At least 20 percent  of home seekers  prefer to buy homes in this price bracket,  The INR 45-90 lakhs budget range remains the most popular, with over 33 percent prospective homebuyers favouring it.

Affordable housing demand has shrunk further, to 21 percent in H2 2023 from 25 percent in H2 2021, and 40 percent in H2 2020. 

   According to Anuj Puri, Chairman, Anarock Group, as per Anarock data  average flat sizes in the top 7 cities grew by 11 percent annually last year – from 1,175 sq. ft. in 2022 to 1,300 sq. ft. in 2023. For the first time, the demand for ready-to-move homes is lower than new launches. The survey highlights that in in H2 2023, the ratio of ready homes to new launches was 23:24 against 32:24 in H2 2021. Interestingly, it stood at 46:18 way back in H1 2020.

The survey further highlights the growing inclination of homebuyers towards suburban areas and city centres, in line with the return to office (RTO) dynamic being witnessed post the COVID-19 pandemic. Thirty percent  of respondents in the current survey chose suburban areas as their first choice for buying a home, as against  25 percent who preferred suburban areas in H2 2021.

The current survey also finds that no less than 75 percent property seekers now want balconies. The desire for more open spaces within homes is a significant change from earlier years, when the focus was more on dedicating almost every square inch for indoor utilization. As many as 74 percent of the surveyed homebuyers insist on improved construction quality.

The other key highlights point out that 58 percent of millennials and  39 percent of Gen-X property seekers intend to use their gains from other investments to purchase homes. While real estate remains the most preferred investment asset class for over 57 percent of homebuyers, there is also a growing sentiment towards Fixed Deposits (FDs) in the wake of rising interest rates. More investors are now backing residential real estate with about 36 percent of prospective buyers preferring properties as investments. Over 73 percent of surveyed home seekers state that their home-buying decision will not be impacted if home loan rates stay below 8.5 percent, especially as inflation is not impacting disposable income.