Bengaluru, November 08, 2024: According to the Knight Frank report – Banking on Bricks, a survey of 1,629 Indian urban homebuyers revealed that 52% prefer apartments, followed by studio apartments at 19%, and independent houses or villas at 17%. Notably, gated communities and plots of land are less popular, chosen by only 7% and 5% of respondents, respectively. In terms of financing, about 79% of respondents indicated home loans as their preferred mode for purchasing a home.
Home ownership prevails amongst homebuyers:
Overall, 80% of respondents expressed a preference for owning a home with only 19% opting for renting and a mere 1% remaining uncertain. This sentiment is consistent across generations: 79% of Baby Boomers, 80% of Gen X, and 82% of Millennials favour homeownership, while Gen Z shows a notable difference, with only 71% preferring to own, and a high 27% leaning towards renting.
Source: Knight Frank Research
Reasons for purchasing a home – Investment vs End-Use:
Baby boomers favour investments but millennials prefer to upgrade their property. The reasons for purchasing a home show distinct generational difference. Millennials (39%) and Gen Z (36%) are leading the trend of upgrading and purchasing for end-use, while Baby Boomers display a stronger interest in investments (29%) and retirement plans (15%).
Overall, 37% of respondents are upgrading to a better home reflecting a growing shift towards mid-range and luxury housing which was traditionally concentrated in select cities but is now expanding to Tier 1 cities in India. The remaining 32% are first-time homebuyers for end-use, 25% are investing, and 7% cite other reasons, such as retirement or acquiring a second home or vacation home.
Shishir Baijal, Chairman & Managing Director, Knight Frank India, said “India’s real estate sector is not only pivotal to our economic growth, contributing significantly to GDP and employment, but also reflects evolving buyer preferences and financial support systems. Our latest survey highlights this continued preference for homeownership, with 80% of respondents aspiring to own homes and a growing trend toward premium properties, particularly in urban areas. As the BFSI sector facilitates this growth—offering home loans, investment avenues, and risk management tools—combined with emerging technologies and infrastructure advancements, we anticipate a resilient real estate landscape that aligns with India’s broader development goals.”
Balancing Aspirations and Practicality: Key Factors Influencing Homebuying Decisions:
Location stands out as a priority and is the determining factor for 50% of respondents, affirming its timeless importance in real estate. However, the near-equal emphasis is also provided on the property size and layout (45%), price and affordability (45%), which suggests that homebuyers are equally focused on securing value for their money while looking for spaces that meet their lifestyle needs.
Interestingly, the builder’s reputation (35%) and proximity to workplace (33%) play an important role, reflecting a strong demand for reliability and convenience, key factors that enhance buyer confidence in their long-term investment. Moreover, with amenities (32%) becoming more significant, buyers are not just purchasing homes, but are opting for enhanced living experiences, seeking integrated facilities like gyms, parks, or co-working spaces. On the financial front, financing options (29%) and future resale value (22%) highlights that affordability and long-term investment potential remain crucial factors in the decision process, particularly as more buyers gravitate towards high-end homes.
Home loans prevail as the most preferred mode of financing amongst surveyed homebuyers
Home loans is cited as the most preferred mode of financing across all income groups, with 79% of respondents relying on this option. However, there is a noticeable variation in how affluent homebuyers approach funding. While 83% of households earning between INR 1 mn to INR 5 mn prefer home loans, affluent buyers with household incomes above INR 5 mn show a higher inclination (19%) to utilize their personal savings or liquidate investments for home purchases compared to 11% in the less than INR 5 mn household income group. This suggests that wealthier individuals take a more flexible, diversified approach to financing, blending traditional home loans with personal resources to secure property.
In addition to financing, the survey sheds light on homebuyers’ expectations from banks and financial institutions during the homebuying process. The top priority for 74% of respondents is competitive interest rates, followed by flexible loan tenures (48%) and a quick loan approval process (38%). Guidance on legal and documentation aspects is also important for 25% respondents, and 15% of them value home insurance options.