96% Future Homebuyers Decision Will Be Hit If Interest Rate Rises Further: CII-Anarock Survey

The survey also said that for over 80 per cent of property seekers, prices remain an important factor as the basic cost of property has been on the rise. 

The survey also found that demand for larger homes has not abated, with 42 per cent of participants preferring 3BHK.

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At least 96% of prospective homebuyers believe that higher home loan rates will affect their buying decisions in the future, according to a recent survey by the Confederation of Indian Industry (CII) and real estate consultant Anarock. The report, titled "The Housing Market Boom," surveyed 4,662 people and also found that over 80% of property seekers consider prices to be a crucial factor as the basic cost of property has increased.

The Reserve Bank of India (RBI) has already increased the repo rate by 250 basis points since May 2022, but it kept the rate unchanged in its recent monetary policy, contrary to market expectations. This move was aimed at containing inflation, but it has raised concerns among prospective homebuyers who fear that further rate hikes could negatively impact the housing market.

The report, released at the 5th edition of the CII Real Estate Confluence 2023 in Mumbai, highlighted the sentiments of buyers in the face of current headwinds, including the possibility of another rate hike by the RBI in the near future. The report noted that "housing sales momentum in the top 7 cities may well be in for a bumpy ride as at least 96% of prospective buyers state that higher home loan rates will affect their homebuying decisions in the future."

The survey also revealed that demand for larger homes continues to be strong, with 42% of participants preferring 3BHK, 40% 2BHK, only 12% 1BHK, and 6% looking for homes with more than 3BHK. In the near future, 3BHK homes are something that over 45% of NCR property hunters are interested in purchasing. In the pricey Mumbai Metropolitan Region (MMR), 2BHK is the preferred option for 43% of participants, although more than 32% of buyers are interested in 3BHK.

The report further found that millennials continue to drive housing demand. Of the total participants who chose real estate as an asset class for investment, at least 52% were millennials who are mainly looking to buy homes for self-use. End-users still dominate the Indian housing market, with the end-user vs investor ratio at 71:29. Of the total surveyed end-users, over 77% are millennials.

Apart from price points and basic amenities in a project, the surveyed buyers are now focused on three primary aspects - timely project completion assurance, the availability of a study room, and adequate ventilation in the property. Over 90% of the surveyed homebuyers will not compromise on timely project completion, 62% insist on well-ventilated homes, and another 55% of respondents consider a study room indispensable.

Anarock Chairman Anuj Puri noted that recent layoffs by both large and small corporates are likely to have at least some impact on demand in the upcoming two quarters and dent growth in the housing market. "Many homebuyers impacted by layoffs may defer homebuying decisions until their employment situation stabilizes. Nevertheless, buying homes remains the top priority for everyone," he added.