Rising Rates Threaten Homebuying Confidence

The dynamics of the Indian real estate market are poised for a significant shift as recent findings from the FICCI-Anarock Homebuyer Sentiment Survey reveal that nearly 90% of prospective buyers will reconsider their home purchase plans if mortgage rates surpass 9%. This survey, which garnered responses from 7,615 participants, indicates that affordability remains a central concern for homebuyers. Over 71% of respondents expressed that their buying decisions would remain stable as long as mortgage rates hover below 8.5%. However, once the rates breach the 9% threshold, an overwhelming 87% anticipate a substantial impact on their purchasing choices, illustrating the delicate balance between financing costs and homeownership aspirations.

The survey underscores that the Indian residential market is primarily driven by end-users, with 67% of participants indicating their intention to buy properties for self-use rather than as investment vehicles. The data reveals a strong preference for homes within the budget range of ₹45-90 lakh, chosen by over 35% of buyers, while 28% are inclined towards properties priced between ₹90 lakh and ₹1.5 crore. This shift toward budget-conscious choices reflects a broader trend among homebuyers prioritising value and sustainability, indicating that the current economic climate is making buyers more discerning about their financial commitments.

Furthermore, the survey highlights the increasing emphasis on quality and reliability in real estate transactions. A staggering 98% of respondents demanded timely project completion, while 93% prioritised improved construction quality. With sustainability now a key concern for buyers, there is a growing expectation for developers to deliver well-ventilated and eco-friendly homes. As highlighted by industry leaders, integrating sustainable practices into residential developments is not just a trend; it has become essential for attracting and retaining buyers. This shift towards sustainability reflects a societal recognition of the importance of environmentally responsible living spaces.

Industry experts have also voiced the need for robust regulatory frameworks to foster investor confidence and ensure sustainable growth in the real estate sector. By enhancing transparency and governance, regulatory bodies like SEBI are paving the way for a more trustworthy investment environment. The maturation of the real estate market, coupled with regulatory measures like RERA, is encouraging buyers to consider under-construction properties, reflecting growing confidence in developers and the industry’s trajectory. As the market evolves, the emphasis on sustainable practices and regulatory compliance will likely shape the future landscape of Indian real estate.