Cash discounts, freebies and slash in home loan rates: Festive Realty 2014 by Makaan.com
The propitious festive period has always brought good news for the Indian Property market. The emotional factor coupled with schemes and offers from developers drive buyers to invest during the festive season. People look forward to invest on the religiously auspicious days and it is believed that over 40% of all real estate transaction take place during October – December period. The season commences with Ganesh Chathurthi followed by Navratri, Durga Puja, Dussehera and reaches its peak around the festival of lights – Diwali and concludes with Christmas & New Year. Makaan.com, India’s fastest growing property site, conducted a comprehensive research christened “Festive Realty 2014” to gauge home buyer’s expectations from the festive period.
Home buyers’ are keen to purchase a property: The overall mood among home buyers is upbeat with majority of them optimistic about purchasing a property during the festive season. More than 63% home buyers are also looking forward to buy a property this festive season. The desire to finalize a property seems to be more intense this year as the buyers are looking forward to schemes and offers from the developers.
Makaan.com's take: The formation of the new and stable government at the center is driving a positive change in all segment of industry including India property market. Improvement in economic fundamentals, implementation of infrastructure projects and increasing tax exemption on home loan repayment will have a positive impact on the real estate market. Home buyers were sitting on the sidelines for the past few years, hesitating to put their hard earned money in the property market. The development agenda, focus on affordable housing, increase in exemption of home loan seems to have created a positive resonance among the Indian home buyers this year but a significant improvement can only be expected over next 12-18 months period.
Home buyers expecting cash discounts of over 5%: The current property market has many sellers but few buyers. Also there is an inventory overhang and current projects are being launched at same or slightly reduced prices. In this scenario, the home buyers are spoiled for choices and therefore around 65% people are expecting that developers will offer cash discounts and freebies this festive season. A very high percentage of respondents (76%) are expecting the developers to offer cash discounts of more than 5% of the home value and another 13% are looking forward to a discount in the range of 2-5%. It seems that the cash discount on the property value will be crucial for the home buyers’ final decision. More than 65% of our respondents are looking forward for cash discounts and 29% people are expecting financial flexibility option like deferred payment.
Makaan.com's take: In a situation where the unsold inventory is piling up , the builders and real estate developers role out freebies in a hope to escalate the sales of the properties. Freebies can include gold coins, cars, club membership, free parking and even fully paid holidays. A cash discount in the purchasing price of a property is also being offered by many developers. The schemes, discounts and freebies are dependent on the financial health of the developer and the stage of project completion. The trend of offering schemes, discounts and freebies is catching up with most of the real estate developers and the trend is likely to continue in the coming years.
Home buyers looking to buy a flat for self occupation: Most of our respondents, around 64%, are interested to buy a flat or an apartment; only 9% want to invest in a land/ plot. This could be lifestyle choice and also because flats are easier to maintain. Around 63% people are looking to buy a property for self occupation whereas 12% are looking to buy a property for a short term investment and 25% people are buying a property for long term investment purpose.
People are looking for affordable homes: When it comes to the budget, 61% of homebuyers, wanting to buy a property this festive season, are looking to invest in affordable housing (under 40 lakhs) and 26% are looking for mid segment housing (40-100 lakhs); however, a negligible number of people are looking for high end (8%) & luxury homes (5%) with budget of 75-125 lakhs and above 125 lakhs respectively.
The home buyers seem more upbeat compared to last year but their spirits are fueled by high expectations from developers. Currently there seems to be gap between buyer’s expectation and corresponding commitment from developers which is likely to spoil the party. While buyers are looking at new launches in under 40 lac budget and at a discount of around or more than 5% from the current prices; the supply in this price bracket is limited and there are fewer discount on offer. While developers are willing to offer higher discounts in High end and luxury housing there seems to be less appetite among buyers for these categories