Things are changing now, however. With the government gradually easing the restrictions, online portals are seeing a surge in traffic. The number of enquiries are at pre-covid-19 levels, but the nature of enquiries have changed. With many companies allowing work from home (WFH) to a large number of employees, people are now looking for spacious houses. A joint survey on consumer sentiment by real estate portal Housing.com and self-regulatory body National Real Estate Development Council (Naredco) indicated that over 40% of buyers are looking to upgrade their homes and there is a drop in the demand for one-bedroom houses. In fact, to be able to afford bigger houses, homebuyers are also opening up to the idea of moving to peripheral locations.
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Looking for space
Many companies allowed WFH due to the lockdown but are now planning to continue with it. As a result, people are now looking to carve out an office space into their homes.
“For around five months, most people have been working from home. This has resulted in a yearning for private space where one can focus on work. Clearly, for those who are looking for an upgrade in the next year, the ‘extra space or study room or multi-functional area’ in the apartment design will be a factor to consider,” said Subhankar Mitra, managing director, advisory services, Colliers International India.
In keeping with the trend, the demand for one-bedroom houses has already witnessed a drop. “We have seen a decline in the demand for single-bedroom homes of around 10% as a proportion of total demand for new homes, resale and rental homes. Market anecdotes also point to the requirement for larger homes,” said Mani Rangarajan, group chief operating officer, Housing.com, Makaan.com and PropTiger.com.
Apart from that, the demand for new house compared with those on resale has surged due to availability of amenities and open spaces around new homes. “Online search for new houses has gone up as compared to homes available in the resale segment,” said Rangarajan. Significant inventory build-up has reduced the premium new houses had over resale properties, which is why the demand has gone up, he added. The problem of rising inventory has intensified post covid-19. As per industry estimates, the premium that new houses commanded over resale properties may have come down from 15-20% to 10-15% depending on the location.
Distance doesn’t count
Commuting is no longer an issue for those working from home, which has reduced the need to take a house close to the workplace. As a result, people are more open to moving to peripheral locations for better affordability. “Demand for homes located in peripheral areas of cities may go up given that homes are more affordable in these areas and buyers can purchase larger homes,” said Rangarajan.
Demand from peripheral areas has already increased, said Sudhir Pai, CEO, Magicbricks, a real estate portal. “This is primarily due to affordability and a fresh supply of ready-to-move-in properties. This demand is prominent in major markets of Bengaluru, Hyderabad, Chennai, Mumbai, Pune, Gurugram and Noida,” Pai added.
There is a surge in demand in tier II and tier III cities as well. “With some people moving to their home towns due to WFH, the demand in these cities has gone up,” said Rangarajan.
Magicbricks is witnessing a 50% increase in searches in small towns. “More working professionals are thinking of having a house in their home towns,” said Pai.
Credibility is key
Covid-19 has heightened the risk of delay in projects. While work was halted across the country due to the lockdown, most developers saw poor sales during the period, adding to the financial stress in the sector. According to a report from Liaises Foras, a Mumbai-based real estate research firm, around 50% of unsold inventory faces high execution risk post covid-19.
In this scenario, people are preferring developers that come with a credible track record. “Post RERA and GST there is a certain shift of homebuyers towards reputed developers. Developers with a good track record registered notable sales even during the lockdown. Going forward, this momentum will continue,” said Mitra.
In any case, there has been a surge in demand for ready-to-move-in houses over the past few years as people are becoming wary of project delays.
A house is one of the biggest purchases of one’s lifetime, so it’s important to be careful. Be mindful of the practices adopted by the employers in your industry to assess if WFH will be long term for you and decide accordingly. If you think WFH may not last, buying that big house in the suburbs at the price you can afford may not really make sense.