The pandemic has changed our lives forever. The same goes for the expectations of buyers in the residential market segment. With the year-end around the corner, let’s have a look at how home-buying trends have undergone transition in the past year and how the real estate industry modified its offerings to capitalize on the spike in demand.
After two years of tumultuous disruption to lives and livelihoods, we all hope to begin 2022 with the expectation that the worst has passed. Markets around the world are bracing themselves to be profitable amidst the circumstances touted as “the new normal”. Consumers’ eyes are also glued to the dynamics of the markets. The housing market being one of them. Though there exists strong sentiments for buying a new home, the deciding factors for making that “once in lifetime purchase” has changed for many.
The journey of buying a house, which earlier revolved around proximity to schools and offices, in the pre-COVID times seems to have taken a new route. Home buying trends in top cities, which were majorly driven by budget constraints, have now gone beyond this one factor. At Square Yards, we bring you a glimpse of how the definition of “homes” has evolved in the year 2021, subsequently changing the subtleties of home hunting trends for years to come! Let’s dive in.
Background on why home buying trends changed?
Owning a property entails its own share of benefits, which all of us agree. Despite that, the rental market has always had a strong foothold in India’s residential market. As of 2019, according to the International Monetary Fund’s (IMF) estimates, India’s residential rental market was worth more than USD 20 billion. Further, 68 percent of the pie or USD 13.5 billion was concentrated in urban areas which was majorly driven by the millennials in the pre-COVID times. It was a no-brainer that the rental markets were riding the wave of growth.
However, a few months later, the pandemic happened and things were never the same again. Rental home units, which were once easy to maintain and used to offer the requisite flexibility, were suddenly not in demand. With economies around the world crashing down, millions of people lost their jobs and landlords asked their tenants to vacate due to the fear of infection. Under such circumstances, the need of “owning one’s home” became more exigent than ever.
This resulted in thousands of first-time home buyers and fence-sitters marking their entry into the real estate sector, searching for homes that could fit their changing needs. But the main concerns that still lingered on was “When”, “Where” and “How”?
Let’s start with “Where”?
Changing interpretation for the ‘location’ of a house in 2021!
Home-hunting trends and parameters have undergone a considerable change. The factors affecting the home-buying sentiments have changed and so have the developers’ offerings. For instance, in pre-COVID times proximity to one’s workplace and schools were given more importance. Most home buyers used to look for properties located in the center of the city even if it meant compromising on the size of the unit.
These sentiments changed altogether when the pandemic swept the whole world. Even though proximity to school and offices remain on the home hunting checklist, it has slipped down in the order of priority. With the looming danger of infection being spread, proximity to hospitals and robust healthcare infrastructure have become more important. As most of the companies switched to the work-from-home culture, home buyers became more flexible and looked for properties even in suburban areas.
Also, as homes in the suburbs and outskirts of the main city were more affordable and had more space at disposal, home buyers ranked safety, comfort, and space higher in the wake of the pandemic. Apart from it, there also had been considerable change observed in the preferences for home configurations.
Lucrative market drivers meant the best time to buy was ‘as soon as possible’
Gauging the strong home-buying sentiments and to boost the derailing real estate growth, the authorities came up with several waivers and changes to make the market as conducive for investment as possible. Reduction in stamp duty from 5% to 3% in Maharashtra, Karnataka, and West Bengal lured several fence-sitters to dive into the market and invest.
Various government initiatives to promote affordable housing for all and then tax exemptions on buying new residential property made the market more conducive. For instance, the union government extended the timeline for claiming a tax deduction on the investment made in a residential house till 30th September 2021.
Apart from it, though RBI maintained the status quo on rates, many banks offered home loans at below 7% interest rate till the end of November 2021. Stamp duty cuts, slashed circle rates, PMAY- you name it and authorities did all to boost the real estate segment.
360-degree transition of the real estate sector
When the pandemic hit and the world came to a standstill, the only way forward for industries was to adapt, reinvent and innovate. This made it impertinent for India’s real estate business, especially the residential segment, which had resisted technology for a long time, to finally embrace it.
Due to the pandemic in order to match pace with the trend of digitization, the real estate companies focused on expanding their footprint via switching to online platforms. The sales domain, which earlier was backed mainly by one-to-one meetings and word of mouth, slowly transitioned into a medium to boost efficiency and guaranteed an enhanced customer experience.
The long-awaited digital transformation, to everybody’s surprise, unlocked the growth potential, marking the rebound of the real estate industry. Various tech-enabled tools like chatbots, Virtual Reality, online bookings and transactions, artificial intelligence etc., undoubtedly became an inseparable part of the industry.
Apart from it, data-driven digital approaches such as machine learning, big data, and Internet of Things (IoT) gave the real estate players an upper hand to capitalize on the demand and helped in maintaining the continuity of buying and selling in the market.
Bringing in more coherent processes in place, both authorities and businesses ensured minimal communication gap between developers and home buyers. Also, homebuyers were endowed with all possible privileges through online processes, ranging from searching a property to registering the property and paying stamp duty charges; all from the comfort of their homes. This significantly optimized the business operations and altered the industry standards garnering more faith of home buyers.
What to expect in 2022?
After two years of persistent disruption to lives and livelihoods, 2022 begins with the hope that the worst of the pandemic has passed and there is scope for growth now. A wide range of indicators now point to economic recovery, with improving employment opportunities, businesses aggressively seeking to hire, wages starting to rise and confidence rapidly growing across the economy as consumers prepare to unleash a post-lockdown spending spree.
