Over 60% homebuyers see real estate prices going up in next 12 months

• Follow

Not only are homebuyers expecting real estate prices to go up in the near future, they are actively hunting for new houses as a primary residence or as a second home. Property consulting firm Knight Frank’s Global Buyer Survey 2021 has interesting insights. The respondents for the Indian edition of the report were divided in two parts.

Part I – Global Indian Segment – comprises respondents in the high-end income segment. Part II gauges buyer sentiment in the mid-end income segment, called Mainstream Indian Segment in the report.

“Given low savings rates and frothy stock markets, buyers are taking a more defensive stance by rebalancing their portfolios with a greater focus on tangible assets such as property,” said Shishir Baijal, Chairman & Managing Director, Knight Frank India.

Will prices go up?

The residents in India expect prices of their primary residence to increase in the next 12 months. In case of the global Indian segment, 32% expect prices to rise. Reflecting a more optimistic outlook, 61% respondents in the mainstream Indian segment expect prices of their primary residences to rise in the next 12 months. Globally, this figure comes in at 64%.

Meanwhile, as many as 26% of mainstream Indians moved their residences within the pandemic period. “These relocations were motivated by factors like want of more open space and proximity to friends and family,” the report noted.

Pent-up demand

There are Indians looking to move to a new house in the next 12 months, thus signalling a pent-up demand in the sector. For Indian mainstream non-movers, 32% were more inclined to move residences in the next 12 months.

“An overwhelming 87% of the respondents who desire to move homes in the next 12 months, favoured the suburban neighbourhood of their current city of residence, while 13% of respondents who want to relocate, may consider an alternate city,” the report noted.

In fact, there is demand for second houses too thanks to study-from-home and work-from-home phenomenon.

“Around 40% of global Indian and mainstream Indian segments say that they are looking to buy a second home. It is not surprising as pandemic has changed the game. People are increasingly buying second homes and holiday homes closer to cities,” said Rajani Sinha, chief economist and national director research, Knight Frank India.

Indians are buying homes abroad too. “London, Dubai, New York are among the top places where Indians look to buy property as an investment. The quantum of investment is governed by the RBI’s liberalised remittance scheme that is $200,000 per year for each family member,” said Baijal.

“It is observed that apart from the spending propensity and house type that typically govern an Indian home buyer’s purchase decision, factors such as access to open green spaces, healthcare and proximity to workplace have also started playing an important role. Energy efficient homes are also gaining traction as the concept is finding preference amongst home buyers in India,” he added.