Homebuyers seek discounts, freebies

A majority of prospective homebuyers across India want discounts, freebies and flexible payment options from builders to encourage them to purchase their flats as real estate continues to be the preferred asset class for investment, according to a joint survey by real estate portal Housing.com and realty body NAREDCO in between January and June among over 3,000 consumers.

The survey report was released recently at a webinar. According to the survey findings, real estate is the preferred mode of investment for 43 per cent (35 per cent last year) of respondents, followed by stocks 20 per cent (15 per cent last year), fixed deposit 19 per cent (22 per cent last year) and gold 18 per cent (28 per cent last year).

The majority of the respondents (71 per cent) feel that flexible payment plans and discounts will provide much-needed financial aid during current times. Naredco President Niranjan Hiranandani said the builders are operating at thin margins but discounts and freebies are being offered by those developers who are stuck with more supply and also have other commitments like debt repayment.

"The price of product is governed by demand-supply. If builders are locked with excess inventories, they do offer discounts. Discounts are also being given sometime as feel good factor to customers," he added. Dhruv Agarwala, Group CEO of Housing.com, Makaan.com and PropTiger.com, said the Covid-19 health crisis has reinforced the importance of home ownership across the world.

"As a result, the residential real estate market is not only witnessing fresh demand from first time homebuyers but also from a lot of consumers who are upgrading to bigger apartments." This demand increase, aided by rock bottom housing prices and historically low interest rates on home loans, has helped residential real estate developers to navigate through the tough economic situation," he added.

Mani Rangarajan, Group chief operating officer of Housing.com, Makaan.com and PropTiger, said builders' margins for under-construction properties have reduced due to an increase in construction costs and land prices in some cities. "Therefore, there is little scope for reduction in basic selling price (BSP). However, builders have been offering flexible payment plans and discounts in some cases to attract customers," he added.

Rangarajan said the housing market has shown great resilience during the second wave of Covid-19, with demand and supply both growing during April-June 2021 compared to the same period last year. "The survey shows that buyers' sentiments have improved since June and people have started searching properties with renewed vigour. We expect demand to remain strong during the festive season," he added.

Rangarajan demanded that state governments should reduce stamp duty on registration of properties to encourage homebuyers. Strong housing sales in Maharashtra's two key markets -- Mumbai and Pune - suggest that stamp duty reduction by the state government did play an important role in stimulating demand during the September 2020 to March 2021 period.

The survey found that economic and income outlook for the coming six months is more optimistic as compared to the first half of 2020. The sentiments have been less impacted this year given that uncertainty is lower as compared to last year. Also, lockdowns have been more selective along with vaccine availability.