Homebuyers question achchhe din

The business confidence index of the Indian real estate sector may still be moderately high despite the slowdown, but it does not seem to gain ground among the collective consciousness of the homebuyers across the country. With the change of the government at the Centre the sector had gone euphoric with the promises made by a real estate friendly government. But the homebuyers still are not convinced with this now proverbial ‘achchhe din’ for making the biggest investment of their life.

As a result, while the market is still, by and large, flat in terms of property transactions, a  pan-India survey finds there is not much expectation ahead with the homebuyers in a wait-and-watch mode.

The politically conscious homebuyers do understand the dynamics of the property market to the extent that close to two-thirds (62 per cent) maintain that the change of government has led to just improved sentiment. Only 2 out of 10 say that market dynamics have actually changed; while an equal number assert that neither the sentiment nor market reality has changed on the ground level.   

These are the findings of a pan-India survey conducted by realty consultancy firm Track2Realty that tried to measure the homebuyers’ confidence index. 

The uncertainity prevailing in the real estate landscape is becoming more pronounced with sale volumes remaining dismally low. 

Not even 10 per cent of the respondents find the time to be bullish for home buying. Twenty per cent  admitted the confidence index is high, even as 26 per cent, termed the sentiment to be only moderate. For over 46 per cent the confidence index was low.

The survey was conducted in 10 cities — Delhi, Mumbai, Kolkata, Bangalore, Chennai, Pune, Ahmedabad, Hyderabad, Jaipur, and Chandigarh. It was an attempt to capture the mood of the homebuyers. “The dominant mood is of  wait & watch mood and the bullish business confidence of the sector has not affected the homebuyers’ sentiments”, says Ravi Sinha, CEO Track2Realty.    

Right direction but miles to go

In spite of the low confidence a majority of homebuyers feel that the priorities of the government for the sector are more or less in the right direction. However, in terms of the style of governance of the Modi Government vis-à-vis the revival of homebuyers’ sentiments is concerned, the opinion is largely divided. As many as 30 per cent of the respondents find it decisive while nearly equal number, 28 per cent call it dictatorial; 26 per cent find it practical to deal with the challenges at hand while 16 per cent simply call it media driven governance style.

This also raises a fundamental question as to whether this style of governance will help the real estate developers getting rid of the project logjam. “Modi Government seems to have the homebuyers’ confidence on this count at least as nearly half the respondents, as many as 48 per cent feel the delivery timelines would improve. Nearly one-third, 34 per cent assess there would be no major difference while the rest 18 per cent maintain it is too early to evaluate”, adds Sinha.

Key deterrents

The fundamental question here is what is the deterrent for the homebuyers. Nearly half of the respondents, as many as 44 per cent blame it on insecure job market that scares them for a long-term investment like housing. 20 per cent of the prospective buyers are waiting for the interest rates to be lowered; 18 per cent maintain that inflation in general and food inflation in particular is draining their resources while rest of the 18 per cent of the respondents have their own other reasons. 

Investment pattern

What would be the investment basket of these Indians for the next 12 months? Well, property still scores over any other asset class but is not as dominant as it used to be or is expected to be in a country where home ownership has an emotional value and not just the investment value of ROI (Return on Investment). 38 per cent of the Indians will prefer to have property as the main investment instrument. 

However, the equity market where many of the Indians have burnt their fingers in the wake of market collapse and is still seen as a risky investment is pretty close to property investment with 36 per cent of the respondents say they would prefer to invest in the stocks & mutual funds due to smaller ticket size and easy liquidity options.

The traditional investment in gold has taken a beating in recent times but still has the investment value with 20 per cent people opting for it as the primary investment instrument. A multiple of other investment options were told by the remaining 6 per cent of the Indians.