Ready or under construction flats: What do homebuyers prefer?

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The transition to work from home concept due to the coronavirus pandemic has triggered a new school of thought among homebuyers. they are now looking for upgradation options as organisations look to establish hybrid workplace models on a permanent basis. As a result, the demand for ready-to-move-in homes has swelled up.

According to a report by Anarock, on the National Capital Region (NCR) luxury homes market, 75% of homebuyers preferred ready-to-move-in properties while 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, the new luxury homes supply in NCR was very limited in the last year.

Within affordable and mid-segment housing, 30% of buyers preferred ready homes while 60% opted for under-construction properties with a completion time of less than two years. Just 10% of preferred properties that would take more than two years to complete. One of the main reasons for choosing under-construction homes with more than 2 years of completion timelines is that there is limited RTM supply in these two categories.

Balanced demand in MMR

In contrast, Maharashtra Metropolitan Region (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.

Along with the consumers’ preference for ready-to- move-in-properties, trends related to bigger homes also exceed all the expectations. 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. As per the report, in NCR, all-time-best affordability attracted more first-time homebuyers to respond to the new pandemic-driven demand for homeownership.

Location not a deal-breaker

“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,” said Anuj Puri, Chairman, Anarock.

He further adds that in contrast, NCR — where average property sizes start from a much higher base — saw more first-time homebuyers leave the fence and enter the housing market. Moreover, it attracts first-time buyers from many neighbouring cities as well.

Sectoral view

The real estate market recovery was already betting on first-time homebuyers and upgradation by many existing homeowners.

Talking about these trends, Anil Pharande, CMD, Pharande Spaces said the demand for bigger homes will continue and this “there is little justification for developing smaller units”.