3BHKs Lead the Market – 50% of Home Buyers Prefer Larger Homes: FICCI-ANAROCK Survey

New Delhi, March 5, 2024: The ‘bigger is better’ mantra continues to drive the Indian housing market. The FICCI-ANAROCK Consumer Sentiment Survey (H2 2023), unveiled at the FICCI Real Estate Summit, finds that the highest homebuyer demand is now for 3BHKs, with at least 50% respondents picking this size. 38% respondent favour 2BHKs. The demand for 3BHKs stood at 42% in in the H2 2022 edition of the survey.

Despite increasing property prices, the demand for bigger apartments continues unabated and is, in fact, increasing. 3BHKs are particularly in vogue in Bengaluru, Chennai, Hyderabad, and Delhi-NCR. In hyper-pricey MMR, 44% of respondents preferred 2BHKs. The demand for 1BHK units is being primarily evident in the western markets of MMR (17%) and Pune (10%).

Aligned to the growing preference for bigger apartments, the demand for luxury homes priced >Rs 1.5 Cr has also gained more traction. At least 20% of the H2 2023 survey respondents prefer to buy homes in this price bracket, against 12% in H2 2021. The Rs 45-90 lakhs budget range remains the most popular, with over 33% prospective homebuyers favouring it.

Affordable housing demand has shrunk further, to 21% in H2 2023 from 25% in H2 2021, and 40% in H2 2020.

  Anuj Puri, Chairman – ANAROCK Group, says, “The supply of bigger homes is seamlessly following the demand for them. ANAROCK data indicates that average flat sizes in the top 7 cities grew by 11% annually last year – from 1,175 sq. ft. in 2022 to 1,300 sq. ft. in 2023. The survey also finds that for the first time, the demand for ready-to-move homes is lower than new launches. The survey highlights that in in H2 2023, the ratio of ready homes to new launches is 23:24 against 32:24 in H2 2021. Interestingly, it stood at 46:18 back in H1 2020.”

The survey further highlights the growing inclination of homebuyers towards suburban areas and city centres, in line with the return to office (RTO) dynamic being witnessed post the COVID-19 pandemic. 30% of respondents in the current survey (H2 2023) chose suburban areas as their first choice for buying a home, against the 25% who preferred suburban areas in H2 2021.

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The current survey also finds that:

• No less than 75% property seekers now want balconies. The desire for more open spaces within homes is a significant change from earlier years, when the focus was more on dedicating almost every square inch for indoor utilization.+
• 74% of the surveyed homebuyers insist on improved construction quality.

Other Key Survey Highlights

• 58% millennials & 39% Gen-X respondents intend to use their gains from other investments to purchase homes
• While real estate remains the most preferred investment asset class for over 57% respondents, there is also a growing sentiment towards Fixed Deposits (FDs) in the wake of rising interest rates
• More investors are now backing residential real estate – in H2 2023, about 36% prospective buyers will purchase properties as investment
• Over 73% survey respondents state that their home buying decision will not be impacted if home loan rates stay below 8.5%
• Inflation is not impacting disposable income as much as it did in the previous year’s survey – in H2 2023, 55% participants felt a notable impact of inflation, down from 61% in the H2 2022 edition

Note – The survey was conducted by ANAROCK Research between July to December 2023 with approx. 5,510 online respondents from across Indian geographies and age groups. The data was analysed and correlated to the current economic conditions.

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