Emerging Trends in Real Estate: Here’s what homebuyers want today While a few homebuyer preferences have altered in the new-normal scenario, there are a few that remain unchanged in contrast to the early COVID-19 period.Amidst unprecedented global uncertainties beginning early 2023, the Indian real estate sector not only weathered the storm but has emerged as a beacon of resilience and adaptability during the year. On annual basis, housing prices rose between 10% and 24% across the top 7 cities, primarily due to increased input costs and strong demand.

Interestingly, despite price rise a significant jump in housing sales and new launches was seen. As per ANAROCK Research, 2023 saw all-time high housing sales of nearly 4.77 lakh units across the top 7 cities, 31% more than 2022, thus creating a new peak in 2023. Amid this strong growth momentum, the FICCI-ANAROCK Consumer Sentiment Survey (H2 2023) was conducted to gauge the mood of the prospective homebuyers and analyse their preferences in the changing scenario. While a few preferences have altered in the new-normal scenario, there are a few that remain unchanged in contrast to the early COVID-19 period. For instance, demand for bigger homes remains strong even now despite rising prices with nearly 50% respondents preferring to buy a 3BHK home, followed by 38% for 2BHK.

“Notably, some trend reversals are also seen to be happening. Investors are once again returning to the market. As seen, over 36% respondents in H2 2023 are looking to buy property from an investment perspective as against 26% respondents back in the COVID-19 period (H2 2020). Likewise, demand for ready properties has shrunk considerably and stands at the lowest end of the preference chart,” informs Anuj Puri, Chairman, ANAROCK Group.

Further, luxury homes are gaining further momentum. According to the survey, at least 46% respondents now prefer to buy homes priced >INR 90 lakh. And at least 75% property seekers prefer to have balconies at home so as to get the feel of more open spaces within a home.

We take a look at the key emerging trends in the real estate market in India, as identified by the survey.

1. Projects nearing completion more in demand

There has been a noticeable shift in preferences among home buyers regarding ready-to-move-in properties, new launches, and nearing completion projects across various cities. As of H2 2023, there is a significant change in buyer preferences, with at least 53% expressing a preference for properties nearing completion, followed by 24% for new launches and 23% for ready-to-move-in homes. This marks a complete reversal of the trend observed in H1 2020, when the ratio of preference for ready-to-move-in properties to new launches was 23:9.

One key contributing factor to this shift is the increased pricing of ready-to-move-in properties over the years, driven by high demand compared to other stages of construction. Buyers are now prioritizing properties nearing completion, possibly due to a balance between affordability and the assurance of possession in the near future.

2. Residential real estate a viable investment option

Notably, investors are again coming forward to take the plunge in residential real estate. In comparison to the H2 2022 survey, there has been a 7% increase in the proportion of participants who are buying property from investment perspective rather than for self-use. In H2 2023, a significant 36% prospective buyers aim to purchase a property from an investment perspective.

This change underscores the growing trend of viewing real estate as a profitable investment avenue, attracting individuals seeking to leverage the potential returns offered by the property market. More so, the large influx of new supply by the large and listed developers has once again boosted the confidence of investors.

3. Affordable housing demand shrinks further

Demand for affordable housing continues to witness a decline – from 40% in H2 2020 to just 21% in H2 2023. Over the past three years, there has been a significant 19% decrease in the share of homebuyers opting for affordable homes. Buyers of these affordable homes continue to be in the wait and watch mode which inevitably has prompted developers to also reduce new supply in this budget category.

ANAROCK data indicates that new supply share in the affordable category has shrunk considerably in the last two years across the top 7 cities – it has declined from 26% in 2021 to just 18% in 2023. Back in 2019, the share was 40% of the total new launches.

4. Demand for luxury homes gains traction

Even while the budget range of INR 45 lakh to INR 90 lakh remained the most favourable budget for over 33% of prospective homebuyers, premium and luxury homes are gaining traction. At least 26% respondents now prefer homes priced between INR 90 lakh and INR 1.5 crore while 20% prefer luxury homes priced >INR 1.5 cr. Back in H2 2021, just 12% home seekers preferred homes in the luxury category.

5. Bigger homes dominate buyer demand

At least 50% of property seekers now prefer 3BHK units, while 38% prefer to buy a 2BHK apartment. In previous years’ survey, demand for 3BHKs stood at 42% (H2 2022). This trend signifies the growing preference for large and bigger homes despite life returning to normalcy post the pandemic. In fact, ANAROCK data also indicates that average flat sizes in top 7 cities have grown by 11% annually last year – from 1,175 sq. ft. in 2022 to 1,300 sq. ft. in 2023. Back in 2021 and 2020, the average flat size across the top 7 cities were comparable to 2022 – 1,170 sq. ft. in 2021 and 1,167 sq. ft. In 2020.

6. Balconies top homebuyer demand

Homebuyers’ preferences are now dictated by the new realities such as the hybrid work model or need for larger and open spaces both within and outside a home. At least 75% property seekers prefer to have balconies at home so as to get the feel of more open spaces within a home. Gone are the days when buyers needed more space for utilitarian purpose only. Further, around 74% prospective buyers now demand improvement in construction quality. Interestingly, 31% prospective buyers still feel the need for a small office space or a separate study room. The hybrid work model is the key reason for this demand.