Shifting Trends: Home buying preferences in the post-pandemic world
Home buying preferences have significantly transformed in the post-pandemic world, as revealed by a recent Savills India survey.
What's particularly intriguing are the motivating factors behind home purchases for personal use across different age brackets. (Image: Freepik)
Customers’ buying behavior has significantly transformed in recent years, with the residential real estate sector being no exception. The COVID-19 pandemic has been a pivotal force in reshaping this behavior.
The series of nationwide lockdowns and the ensuing challenges have created daunting experiences. This period prompted deep reflection on homeownership and its design aspects. Individuals began to recognize the value of owning a home or upgrading to larger homes with desired amenities, causing notable shifts in home buying preferences such as the age groups driving residential purchases in India, the motivations, demand and expectations of potential buyers.
To uncover this shift, Savills India conducted a survey to explore the home-buying preferences of prospective buyers. It gathered responses from more than 450 participants across 35+ cities, and comprehensively analyzed the responses that resulted in 4 major findings:
1. Buyer Behaviour: Millennials are gravitating towards homeownership, while Gen X and older demographics are considering larger homes
The process of purchasing a home is a multifaceted decision influenced by various socio-economic factors. In the Indian context, it has long been ingrained as a cultural norm. However, pre-pandemic, factors such as the prevalence of office-based work culture, flexible rental options, and the unpredictable nature of employment trends led many, especially millennials (born between 1981-1996), to favour renting over buying. Conversely, older generations, particularly Gen X and beyond (born between 1965-1980 and earlier), displayed a stronger inclination towards homeownership, largely due to their life stage and priorities.
2. The Urgency to Buy: The next 12 months
Of late, millennials, who typically leaned towards renting, began gravitating towards homeownership. Meanwhile, Gen X and older demographics began considering larger homes, whether within urban centers or in tourist destinations. As per a survey recently conducted by Savills, the urgency to buy a home is evident, with over two-thirds of respondents planning to purchase a house within the next 12 months.
3. What motivates the Purchase?
* Higher Rents
What’s particularly intriguing are the motivating factors behind home purchases for personal use across different age brackets. The desire to simply own a home emerges as the most compelling reason across all age groups. While the preference for paying EMIs over high rental costs stands out as a significant motivator for those aged between 26 and 32, the need for improved and more spacious living arrangements becomes increasingly prominent for respondents in older age groups. Additional motivating factors for purchasing homes for personal use include the need for a more compact living space after retirement, considerations regarding capital gains, and the desire to buy homes for the well-being of children, among others.
* Amenities in Demand
The survey findings highlight a significant preference among individuals aged 42-65 for embracing smart homes equipped with cutting-edge technologies, with 65% expressing a clear inclination towards this trend. Additionally, within the same age group, there is a robust demand for a conducive work-from-home environment, with over 50% expressing a strong need for such arrangements, underscoring the escalating popularity of remote work.
However, a shift has been noticed in the age bracket of 26-41 years – the provision of childcare facilities along with smart homes emerges as a top priority. Furthermore, the integration of electric vehicle charging stations garners notable interest, with 32-42% of potential buyers across age groups expressing a desire for this feature, emphasizing its significance in the evolving landscape of desired amenities.
4. The Sweet Spot: INR 2 Crores
* Tier 1 cities are the top choice
The survey indicates that 54% of prospective buyers currently based in tier 1 cities are looking to purchase a home priced up to INR 2 cr. in tier 1 cities (including their home cities), while 32% have a budget of INR 2.1 to 4 cr.
* Tier 1 cities expected to drive demand from Tier 2 residents
The inclination of homebuyers from tier 2 and 3 cities towards acquiring properties in tier 1 cities underscores the evolving aspirations of India’s population. Their quest for better opportunities and improved lifestyles enhances the dynamism in the residential real estate market of tier 1 cities.
The survey indicates that 46% of prospective buyers from tier 2 and 3 cities are interested in purchasing homes priced up to INR 2 cr. in tier 1 cities, primarily for end-use purposes.
The Way Forward
The Indian residential real estate market is undergoing significant transformation, and in a decade, it can look very different. Emerging trends such as fractional ownership and the rising interest in second or destination homes are reshaping buyer preferences.
Technological advancements have increased the popularity of smart homes with cutting-edge amenities. These factors have contributed to a vibrant and dynamic market that adapts to the evolving needs and aspirations of homebuyers. While the progress so far is promising, the future holds even more intriguing possibilities.
