A recent FICCI-ANAROCK report has reaffirmed real estate’s dominant position as India’s preferred investment asset. The survey, conducted among 7,615 respondents across 14 Indian cities, revealed that nearly 59% of participants expressed a strong desire to invest in real estate.
Among those planning to invest in real estate, 67% sought to purchase a home for personal use, while 33% viewed it as an investment opportunity. Of the latter group, 57% aimed to generate rental income, 20% anticipated capital appreciation, and 23% considered real estate as a secure asset for their future. Millennials, in particular, exhibited a strong preference for homeownership. A significant 66% of millennials and 41% of Generation X respondents indicated their intention to utilize their investment gains to purchase a home in the future.
The report also highlighted a notable shift in preferences among homebuyers, with a decline in demand for ready-to-move-in units and a corresponding rise in demand for under-construction properties. This trend can be attributed to several factors, including lower prices for under-construction units and the opportunity to customize homes according to personal preferences. However, the report also revealed that over 53% of homebuyers are dissatisfied with the current options available in the affordable housing segment. Key concerns include location accessibility, poor construction quality, and small unit sizes. The supply of affordable housing across India’s top 7 cities has also contracted significantly, declining from 26% in 2021 to 17% in September 2024.
While affordable housing faces challenges, demand for luxury homes remains robust. 28% of respondents expressed a preference for houses priced between Rs 90 lakh and Rs 1.5 crore, compared to 18% before the pandemic. The most common budget range for houses continues to be between Rs 45-90 lakh, with 35% of respondents choosing this option. For under-construction properties, respondents prioritized timely project completion (98%), improved construction quality (93%), and well-lit, ventilated homes (72%). The report also noted a growing preference for larger, more luxurious living spaces, with 3BHK apartments and residential plots gaining popularity.
Home loan interest rates remain a significant factor influencing home buying decisions. While a majority of respondents (71%) indicated that interest rates below 8.5% would have minimal impact on their buying decisions, rates exceeding 9% could significantly impact 87% of buyers. With the RBI maintaining a hold on interest rate cuts, home loan rates are expected to remain elevated for the foreseeable future.
