Bigger homes the top choice for buyers despite price surge: Experts

However, price remains a key factor for over 80% of buyers; Many property seeker impacted by layoffs may defer home buying decisions for a while

Despite rising prices, bigger homes have remained the preferred choice for the aspirational middle class, gen-Z and millennials, the three key drivers of housing demand, according to experts.

They add that the realty economy is now expected to grow by 12-15 per cent CAGR in the next five years.

According to a report by CII-Anarock, out of a total of 4,662 survey participants, 42 per cent prefer 3BHKs, 40 per cent prefer 2BHKs, and 12 per cent want 1BHK. Also, six per cent seek homes exceeding the 3BHK configuration.

“Anyone who can afford bigger spaces is looking to upgrade they are spending more time at home. Buyers whose financial condition and lifestyle remained unaffected have developed a great interest in bigger homes," said Aakash Ohri, group executive director and chief business officer, DLF.

The impact of the past few years has reinforced the significance of spacious and bigger homes both, for indulgent living and as a stable investment.

The need to upgrade has already led to a surge in big-ticket transactions and this trend is expected to continue even in the year ahead, Ohri said.

The two realty hotspots, NCR and MMR, have seen particularly strong momentum in the sale of high-ticket homes over the past few quarters.

The report finds that over 45 per cent property seekers in the National Capital Region (NCR) are looking to buy 3BHK homes in the near future.

Pankaj Bansal, director, M3M India also affirmed there is a paradigm shift to 3 BHK from 2 BHK earlier.

The shift is being seen in several cities, including NCR.

"From growing families to work-from-home professionals, the demand for 3BHK homes in NCR reflects the diverse needs of today's homebuyers. Whether it's for creating a dedicated workspace or accommodating guests, it provides the flexibility that modern living demands," said Pradeep Aggarwal, founder & chairman, Signature Global.

"With NCR's dynamic lifestyle and booming infrastructure, it's no surprise that 3BHK homes are becoming the go-to option for those seeking comfort, convenience, and style in their new abode," Aggarwal added.

Some experts also foresee a significant shift by the middle income group from mid-segment homes to high-end luxury homes.

Bansal said that in calendar year 2023, the middle class will shift from mid-segment, consisting of homes price in the Rs 40-80 lakh range, to high-end luxury residential units (Rs 80 lakh-1.5 crore).

Others, like Ohri, feel that the rise in demand for bigger homes cuts across all segments.

That said, price remains a key factor for over 80 per cent buyers, as apart from home loan rates, the basic cost of property has been on the rise in the last one year, according to the report.

Anarock data reveals that average property prices across the top 7 cities were up by 6-9 per cent in the first quarter (Q1) of the calendar year 2023 (CY23) from the Q1 2022 level, mainly due to an surge in raw material costs and overall rise in demand.

"Rate hikes are just part of the overall demand scenario. Recent layoffs by both large and small companies are likely to have at least some impact on the demand in the upcoming two quarters, and dent growth in the housing market," said Anuj Puri, chairman, Anarock group.

Many homebuyers impacted by layoffs may defer home buying decisions until their employment situation stabilises, Puri said.