India’s real estate has been impacted deeply by the COVID-19 outbreak and consumer sentiment is currently pessimistic and uncertain due to the national lockdown effects. A recent consumer sentiment report by Magicbricks – COVID-19 Property Buyer Sentiment Survey reveals that one out of three home buyers wants to drop or keep on hold their property purchase decision. However, a large majority of 67% are still planning to go ahead with their investment, although with a reduced budget.
The consumer sentiment survey reflects that 67 percent of the respondents still want to invest in a property albeit with some delay, highlighting the reinforced significance of homeownership during any catastrophe like a pandemic or a national lockdown. It also revealed that 73 percent of home buyers are likely to decrease their budget.
Reflecting on the overall consumer sentiment, Magicbricks’ COVID-19 Property Buyer Sentiment Survey also stated that during the pre-COVID-19 period, about 56 percent of the respondents had either shortlisted or were actively looking to buy property in less than six months. However, the outbreak has led to most buyers stretching their timelines by a few more months. Interestingly, it has been observed that the Gen Z (people born in the 90s) are the first ones who moved out of the property market, with 50 percent either holding or dropping their plans to invest in a property. On the other hand, people in the age group of 25 to 45 years seemed inclined towards buying properties with a reduced budget. Also, on average, 52 percent of buyers are looking to postpone their buying plans, these buyers being those who had either shortlisted a property or were actively looking or exploring.
Commenting on the report, Mr. Sudhir Pai, CEO, Magicbricks, said: “The real estate industry was already suffering from liquidity crisis & construction delays and now the COVID-19 outbreak and the resultant national lockdown has just compounded the problems for the industry. This has temporarily affected the buying intent of more than 80 percent of homebuyers across TIER I cities. This, in turn, has also delayed the home buying process by 6-9 months.”
Across cities, Pune and Bengaluru witnessed the least decline in buying sentiment due to the uncertainties around the outbreak of COVID-19 among TIER I cities. Even in the post-COVID-19 scenario as well, the buying intent in these cities is somewhat less affected as per the Magicbricks research. National Capital Region (NCR) and Mumbai Metropolitan Region (MMR), already had sluggish market sentiments before the lockdown and comparatively lower consumer buying intent. The survey indicated that both these markets are likely to be slightly less affected by the lockdown when compared to cities such as Ahmedabad and Kolkata.
Investors and End users
The Sentiment Analysis found that while both investors and end-users remain affected to an extent because of the pandemic, the investor community is more likely to defer their property investment plans. The survey findings further go on to hint that in general, the end-users are more inclined to buy property in the near term post-COVID-19. Thus, despite the overall expectations of price fall in at least a few pockets across the country, it seems the end-users should be the first to return to the market. 69 percent of end-users are planning to defer their property purchase decisions up to a year.
Challenges post Covid-19
During these times of uncertainty and apprehension, buyers are facing multiple challenges while evaluating their options. According to the Magicbricks’ Survey, the top five challenges to property buying post-COVID-19 are price uncertainty, timely handover of the project, visiting sites, getting loans from banks and registry & documentation of the property.
What developers can do for Homebuyers?
When respondents were asked about the key areas which developers could facilitate for buyers in the purchase of the property post lockdown, the key factors enumerated were:
- A decrease in prices remained the top ask of the respondents from the developers.
- 3/4th of the respondents felt that relaxed financial terms like a moratorium period and lower down-payments were the most critical areas to help buyers make a purchase
- Respondents also felt that in a post-lockdown environment, they may face difficulty in getting ‘upgrade-works’ in the property like creating a modular kitchen and woodwork
- About 43% of the buyers felt that developers should provide furnished properties to lessen the post-buy hassles
- Less human interaction and online paperwork were cited as also cited as important by one fourth of the respondents