NCR & MMR Are A Picture Of Contrast During COVID-19

Bottomed-out prices, lower stamp duty charges, low interest rates and the growing preference to move to the peripheries amid work-from-home viability prompted as many as 65% MMR homebuyers to upgrade from 1BHKs to 2BHKs/3BHKs.

In NCR, all-time-best affordability attracted more first-time homebuyers to respond to the new pandemic-driven demand for home ownership leading to 85% purchasing a new property, a report has said.

The pandemic has brought forth many contrasting trends in the country’s two major real estate hotspots – NCR and MMR. Of the total housing sales in NCR (nearly 21,750 units) and MMR (approximately 47,140 units) in the nine months between July 2020 and March 2021, 85% of buyers in NCR purchased their very first homes, an analysis by Anarock has said.

In MMR, a massive 65% of buyers upgraded to bigger properties (from 1BHK to 2/3 BHKs).

Just 15% of end-users in NCR felt the need to upgrade to bigger homes, while 65% of buyers in MMR upgraded, driven by the ‘new normal’ imperatives of WFH and e-schooling.

The end-users to investors ratio in both regions stood at 90:10.

The 950 sq. ft. average size of homes in MMR is significantly smaller than NCR’s 1,250 sq. ft.

“In the pre-Covid era in MMR, the need to live closer to workplaces in areas in and around the pricier CBD areas prompted many buyers in MMR to opt for compact configurations. However, post-Covid, in the new hybrid and WFH environment and with various infra upgrades, the peripheral areas have also become attractive,” Anuj Puri, Chairman – ANAROCK Property Consultants explains.

Many homebuyers upgraded to larger homes in non-central locations. Reduced property rates, a limited-period stamp duty cut, and attractively low home loan interest rates were other reasons, he said.

In contrast, NCR – where average property sizes start from a much higher base – saw more first-time homebuyers to leave the fence and enter the housing market. Moreover, it attracts first-time buyers from many neighbouring cities as well, he said.

RTM vs Under Construction Preferences

There is also a buyer preference contrast in terms of construction stages: On the NCR luxury homes market, 75% of homebuyers preferred ready-to-move-in properties, and 20% went for properties due for completion in under two years. Only 5% opted for properties with completion timelines exceeding this period.

In NCR, there is a marked need to navigate away from construction-related risks. Also, new luxury homes supply in NCR was very limited in the last year. As per ANAROCK data, the whole of NCR saw just over 2,370 new luxury homes (priced >Rs 1.5 crore) hit the market.

Within affordable and mid-segment housing, 30% of buyers preferred ready homes while 60% opted for under-construction properties with completion time of less than two years. Just 10% preferred properties that would take more than two years to complete.

One of the main reasons for choosing under construction homes with more than two years of completion timelines is that there is limited ready-to-move-in supply in these two categories.

In contrast, MMR saw a more balanced demand for all categories of properties – ready, those to be completed within two years, and options with longer completion timelines. The ratio of these three categories was 38:35:27 in MMR.

Effective implementation of MahaRERA and most of the supply being from leading developers with good completion records were the key reason for this balanced homebuyer demand, the analysis said.

During COVID-19, several ‘renters’ turned into first-time home buyers and that led to an uptick in the top two property markets of India – MMR and NCR. The real estate sector also witnessed a trend wherein existing homeowners grabbed the best deal to upgrade into a bigger apartments, said Niranjan Hiranandani, national president, Naredeco.

The pandemic saw investors preferring real estate over paper-based volatile asset classes as also more end-users rather than investors, he added.

(Source: Moneycontrol)