Homebuyers In India are Preferring New Launch Homes

When the real estate Industry in India faced two big events Real Estate Regulation & Development Act (RERA) and the Goods and Services Tax (GST), they proved to be the game changers for real estate market. 

While RERA aims to regulate the unregulated sector with delayed projects, GST strives to rationalise the tax structure and bring uniformity in prices. Most importantly, both have revived the faith of consumers where 36% of homebuyers have been found to prefer the ready to move in properties. A consumer sentiment survey states lower prices influenced more than 50% buyers to purchase homes in the year 2018, out of which approximately 52% would go back to the same developer and purchase the property. Bangalore as the end-user-driven market observed 44% of respondents purchase homes for investment. The city also seems to be the most favoured investment destination for NRIs. 70% of prospective buyers prefer properties which are less than ₹ 80 Lacs, tier 2/3 cities are the newfound hub for investment due to low property prices and improved infrastructure. The survey confirms 26% investor approval rating for these cities. Bangalore remains just behind tier 2 and 3 cities with 21% votes for being the second most preferred investment location in India.

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Apart from the ready-to-move-in homes, the new launches, unlike previous years, now see a decent revival with 18% of respondents preferring to buy new launch properties which otherwise was 5% in the previous survey. Not just the citizens in India, but more and more NRIs now consider newly launched properties over ready-to-move-in or under-construction. Almost 44% of NRIs have been observed doing so. Along with the attractive prices, the enforcement of RERA is credited to influence over 50% of buyers in Delhi NCR for their investment in real estate in 2018. Another city, Kolkata, attracted 58% of buyers due to lower home loan rates. The reform-driven market environment and government policies have together made it possible. The long-term investors, having realistic returns expectations are returning. Out of the total, 58% of respondents bought property for end use, and 42% bought for investment which has grown by 10% compared to the previous survey.

The outcome of the survey - An increased TDS threshold on rental income from ₹ 1.8 Lac to ₹ 2.4 Lac has been observed as one major benefit of the recent budget. Another equally significant benefit is that of the rolling capital gains tax from investment in 1 house over to 2 new houses. Hence, property investment with a focus on rental income is once again considered a lucrative option with 53% of respondents falling in this category. A majority still prefers to buy property within the city limits such as close to offices and schools i.e. 41% of respondents. On the other hand, 38% are the ones who prefer suburban areas over the city. By cities, 38% of respondents made a comparison with cities like NCR and MMR. At present, the developers are focused on providing affordable and mid-range housing segments to the homebuyers. The report says the affordable and mid-range housing segments combined 77% share between 2017-18 with 39% in affordable and 37% in the mid-range segment.

Other highlights - 55% of respondents preferred 2 BHK apartments while 53% went with compact-sized homes. Delhi/NCR saw 56% of respondents going with ready-to-move properties and  44% NRIs with new launch properties. RTM homes are preferred by 27% of respondents in MMR and 23% in Hyderabad. The top 7 cities in India has a total of 41% of respondents who considered properties priced between ₹ 30 - 45 Lacs. Among these top cities, Bangalore, Delhi-NCR, Pune and Hyderabad, the homebuyers are gradually shifting their focus from affordable to mid-segment category.