85% Buyers in NCR Bought 1st Homes, 65% in MMR Upgraded House Sizes Post COVID-19
The pandemic has brought forth many contrasting trends in the country’s two major real estate hotspots – NCR and MMR. Of the total housing sales in NCR (nearly 21,750 units) and MMR (approx. 47,140 units) in the nine months between July 2020 and March 2021, 85% of buyers in NCR purchased their very first homes. In MMR, a massive 65% of buyers upgraded to bigger properties (from 1BHK to 2/3 BHKs).
The end-users to investors ratio in both regions stood at 90:10.
Just 15% of end-users in NCR felt the need to upgrade to bigger homes, while 65% of buyers in MMR upgraded, driven by the ‘new normal’ imperatives of WFH and e-schooling. The 950 sq. ft. average size of homes in MMR is significantly smaller than NCR’s 1,250 sq. ft.
Bottomed-out prices, lower stamp duty charges, low interest rates and the growing preference to move to the peripheries amid WFH viability also prompted more MMR homebuyers to upgrade from 1BHKs to 2BHKs/3BHKs. In NCR, all-time-best affordability attracted more first-time homebuyers to respond to the new pandemic-driven demand for homeownership.
Anuj Puri Anuj Puri, Chairman – ANAROCK Property Consultants says, “In the pre-Covid era in MMR, the need to live closer to workplaces in areas in and around the pricier CBD areas prompted many buyers in MMR to opt for compact configurations. However, post-Covid, in the new hybrid and WFH environment and with various infra upgrades, the peripheral areas have also become attractive. Many homebuyers upgraded to larger homes in non-central locations. Reduced property rates, a limited-period stamp duty cut, and attractively low home loan interest rates were other reasons.”
“In contrast, NCR – where average property sizes start from a much higher base – saw more first-time homebuyers to leave the fence and enter the housing market. Moreover, it attracts first-time buyers from many neighbouring cities as well.”
RTM vs Under Construction Preferences
There is also a buyer preference contrast in terms of construction stages:
On the NCR luxury homes market, 75% of homebuyers preferred ready-to-move-in properties, and 20% went for properties due for completion in under two years. Only 5% opted for properties with completion timelines exceeding this period. In NCR, there is a marked need to navigate away from construction-related risks. Also, new luxury homes supply in NCR was very limited in the last year – as per ANAROCK data, the whole of NCR saw just over 2,370 new luxury homes (priced >INR 1.5 Cr) hit the market.
Within affordable and mid-segment housing, 30% of buyers preferred ready homes while 60% opted for under-construction properties with completion time of less than 2 years. Just 10% preferred properties that would take more than 2 years to complete. One of the main reasons for choosing UC homes with more than 2 years of completion timelines is that there is limited RTM supply in these two categories.
In contrast, MMR saw a more balanced demand for all categories of properties – ready, those to be completed within two years, and options with longer completion timelines. The ratio of these three categories was 38:35:27 in MMR. Effective implementation of MahaRERA and most of the supply being from leading developers with good completion records were the key reason for this balanced homebuyer demand.