Measurements are only statistics, and statistics lie.” This advertisement for shoes was the first to come to mind when we saw the growing pile of research reports and analysts’ recommendations which brandished statistics to prove that property was moving away from the bottom.
How could we prove that these reports were true or otherwise? Quite simply, by asking ‘real’ people — buyers and brokers — if they were planning to buy or sell property in the current market. We could have conducted a random poll, but to get accurate responses, we decided to team up with 99acres.com, an online portal dedicated to the real estate industry. A structured questionnaire was sent to the portal, which conducted the survey over 15 days, from 1-15 September 2009.
Vineet K. Singh, business head, 99acres.com, says, “The survey was conducted through targeted mailers to subscribers, who we know are active stakeholders in the property market (a visitor is registered with the site only when he makes enquiries). This meant that we could eliminate passive members, who would have responded to the survey without having any intent of buying or selling property.”
Of the 5,000-plus buyer respondents, 81% were salaried and 91% of these said they would consider buying property over the next six months, compared to 88.6% of self-employed who are inclined to purchase property in the same period. More than half the salaried respondents also plan to buy property for investment, while 48.1% are not considering investing in real estate.
The age profile of the respondents also provided us with interesting insights. For instance, 48.32% of those in the 25-35-year age group are looking at a budget of less than Rs 20 lakh, compared to only 29.45% of those above 45 years. We also found that people in their mid-40s are eager to buy a house soon—91.6% of respondents over 45 years said that they were thinking of buying property in the next six months.
Finally, to understand the source of supply, we decided to poll some of the larger property developers in the metros. We contacted 25 developers across the country—in Delhi, Mumbai, Chennai, Kolkata, Bengaluru, Pune, Jaipur, Chandigarh, Ahmedabad, Kochi and Nagpur. While only two say that 25-40% of their sales have been to investors, almost all believe that the market has bottomed out and that buyers will be back in large numbers. Most interesting is the fact that only one developer found the sales had declined in the past three months; all the others reported that sales had remained constant or had gone up.
The bottom line is that statistics, in this case, are true. The real estate market is definitely set to rise, making this a good time to consider investing in it.
The Realty Check
The MONEY TODAY-99acres.com survey of buyers, brokers and developers found that property prices across India are rising. The respondents were from all parts of the country and covered most demographics.
BUYER
1. Would you consider buying property in the next six months?
Yes: 91%, No: 9%
With affordable housing and several new launches over the past few months, an overwhelming majority feels this is a good time to buy property.
2. The biggest driver for your decision...
Falling property prices: 52%, Chances of prices going up again: 44%, Fall in interest rates: 27%
While price correction is the biggest possible driver to buy for half the respondents, chances of property rates going up is also high among the reasons.
3. The biggest deterrents to a possible decision to purchase...
Uncertainty over prices and interest rates: 59%, Delay in project delivery: 30%, High property prices: 28%, High interest rates: 22%
4. What is your budget for buying property?
Below Rs 20 lakh: 44%, Rs 21-35 lakh: 33%, Rs 36-50 lakh: 14%, Above Rs 50 lakh: 9%
5. Ready-to-move-in, new launch or resale?
Projects under construction: 46%, Ready-to-move-in project: 33%, Resale property: 21%
Lower price tag of new launches makes them the most preferred option. However, a third would prefer ready projects because of concern over delays.
6. Would you buy property as an investment?
No, it can be risky: 46%, Only if I get a very good deal: 29%, Yes, it can be lucrative: 25%
BROKER
1. Is it a good time to invest in property?
Yes: 78%, No: 22%
Brokers are active players in the property investment market and many of them actually put in their money in the market.
2. Have sales gone up in the past two months?
Marginally: 52%, Substantially: 26%, No: 22%
Less than a quarter of brokers have seen a drop in sales. Most of these are from IT industry-dependent cities like Bengaluru and Hyderabad.
3. Increase in enquiries for rental
33% (0-5%), 26% (5-10%), 25% (10-15%), 16% (More than 20%)
While rental enquiries have gone up marginally, brokers expect the pick-up to be muted till the job scenario recovers.
4. Clients buying property for investment
No (28%), 5-10% (29%), 20-40% (17%), 10-20% (26%)
More than two-thirds of the brokers believe that investors will enter the market again, and that pent-up demand is now turning into sales.
DEVELOPER
1. Do you think the residential real estate market has bottomed out?
Yes: 92%, No: 8%
Developers, as expected, are the most optimistic of the three groups that were surveyed. The majority of those who feel that there is likely to be more correction have projects in the premium category, which, depending on the location, may see some correction.
2. Have sales increased in the past three months?
Yes: 76%, No: 20%, Sales went down: 4%
The sudden pick-up in sales has prompted many developers to launch new projects to lap up the existing demand to generate cash flows.
3. Will you hike prices if sales pick up in two months?
Yes: 40%, No: 28%, Not sure: 32%
Only those developers who had squeezed their margins are thinking of a price increase. The rest plan to hold prices till the festive season is over in January.
4. What part of your sales in the past six months was to investors?
44% (0-10%), 20% (11-25%), 8% (25-40%), 28% (not sure)
Most developers feel that investors have entered the market, while some are not able to distinguish between a buyer and an investor.
5. Have you increased prices in the past three months?
Yes: 48%, No: 52%
Responses don’t always add up to 100 because of multiple choices.
