The COVID-19 pandemic has fundamentally altered the way home buyers think about their homes. Consumers’ behavior has changed significantly, causing a structural change in the way they see how to live and where to live, including their sentiment towards home ownership. Huddled in the comfort of their homes during the rigorous lockdown has led many to re-evaluate their priorities and appreciate the sense of security that owning a home brings.
In light of this, Knight Frank has published its Global Buyer Survey, which looks at the impact Covid-19 has had on residential buyers’ attitudes towards home purchases around the world.
According to the report, 19% of people worldwide have moved to a new home since the start of the pandemic; this rises to 25% in Australasia and North America. Of those who do not move, 20% are more inclined to move in 2021 even as the pandemic continues.
In the Indian edition of the survey, 26% of the majority indigenous population had changed residence during the period of the pandemic. These relocations were motivated by factors such as the lack of more open space and proximity to friends and family. For people not moving from mainstream India, 32% were more inclined to move residence in the next 12 months. An overwhelming 87% of respondents who want to move house in the next 12 months, preferred the suburban neighborhood of their current city of residence, while 13% of respondents who want to move, may consider an alternative city.
WILLING TO RELOCATE IN THE NEXT 12 MONTHS AS A RESULT OF THE PANDEMIC
Globally, 64% of respondents expect the value of their primary residence to increase in the next 12 months. In the case of the Global Indian segment, which represents the highest income segment, 32% expect prices to rise. Reflecting a more optimistic outlook, 61% of respondents in the mainstream Indian segment expect their primary residence prices to increase in the next 12 months.
32% of respondents from the mainstream Indian segment expressed their willingness to move to a new home in the next 12 months as a result of the pandemic, while 14% of the global Indian segment indicated a desire to relocate. In a price sensitive environment, more than 50% across all income segments in India cited an unwillingness to pay a premium for branded residences. Marking a significant mention, 32% of the global Indian segment expressed willingness to pay a premium for a greener home.
The report emphasizes that the future of work will play an important role not only for the commercial sector but also for the residential sector. More than half of those surveyed in the Mainstream Indian segment expect to return to office for the entire workweek once all restrictions are lifted. 47% of respondents from the global Indian segment expect to continue working 2-4 days a week from the office once all restrictions are lifted. In the mainstream segment of India, professionals, i.e. lawyers, architects, doctors, public accountants, etc., showed the greatest inclination towards 5 days of work from the office. days. This is largely due to the impact of tech company employees working from home.
Globally, 59% of respondents expect to work 3-5 days a week from the office once all restrictions are lifted. In the Middle East and Asia, the figure is 41% and 36%, respectively.
Commenting on the same, Shishir Baijal, Chairman and CEO of Knight Frank India, said: “The pandemic has changed the perspective towards home ownership. Globally, two trends have been highlighted in recent months. First, a growing ambivalence from some buyers when it comes to location, as long as they can secure a co-primary home that offers the lifestyle and enjoyment they feel they have missed. And second, given low savings rates and sparkling stock markets, buyers are taking a more defensive stance by rebalancing their portfolios with a greater focus on tangible assets like property. “
Shishir added: “The pandemic has changed the perspective towards home ownership in different income strata of India. Our Homebuyer Survey confirms that across the spectrum of Indian homebuyers, 32% showed interest in moving out of their homes before the pandemic. It is observed that, in addition to the propensity to spend and the type of housing that typically govern the purchasing decision of an Indian home buyer, factors such as access to open green spaces, medical care and health have also started to play an important role. proximity to the workplace. Energy efficient homes are also gaining traction as the concept is gaining popularity with home buyers in India. “
Optimistic outlook for price appreciation in primary residences
Globally, more than two-thirds of respondents expect the value of their current home to increase in the next year and most expect an increase of between 1% and 9% over the 12-month period. This is in line with Knight Frank’s Prime Global Forecast Index, which highlights that house prices, on average, are likely to rise 4% in 2021 globally.
From the context of India, there is more optimism in sentiment from the main Indian segment than from the global Indian segment. Almost 58% of respondents in Mumbai and Kolkata expected an increase of up to 10% in residential prices, while 53% in Pune also have a similar expectation. More than 60% of respondents in southern cities expect a price increase of up to 20% in the next 12 months. Around 19% of respondents in Bengaluru and 18% in Chennai expect prices to increase 20% or more in the next 12 months.
From a global point of view, since the advent of the pandemic, up to 19% of those surveyed have moved to a new home. However, the global Indian segment remained cautious about relocating during the pandemic, with only 7% moving to a new home in the past 12 months. In contrast, almost 26% of respondents in the main segment of India made the move to relocate in the same period.
Sharing details about the propensity to spend to buy a new home, the report cited that 38% of respondents from the main Indian segment indicated an increase in budget allocation towards residential purchase. More than half of the respondents from the global Indian segment did not indicate any change.
The attitudes of the main buyers of the Indian segment in South India are quite optimistic when it comes to the propensity to spend on the purchase of new homes. 63% in Chennai, 54% in Hyderabad and 39% in Bengaluru have indicated an increase in the propensity to spend.