Higher property prices no bar, buyers seek larger homes, says Ficci-Anarock survey

Bengaluru: Homebuyers are increasingly favouring three-bedroom apartments and balconies, surpassing the popularity of two-bedroom homes, as the demand for more spacious living spaces continues.

A Ficci-Anarock Consumer Sentiment Survey for the second half of 2023 found that 50% of participants preferred three-bedroom apartments (3BHKs), compared to 38% who wanted two-bedroom homes. This inclination for 3BHKs marked a rise from 42% in the same period a year ago.

Conducted online between July and December 2023, the survey compiled responses from 5,510 participants, highlighting the continuous demand for more spacious living options despite the upward trajectory in property prices.

This preference for larger homes was particularly pronounced in urban centres such as Bengaluru, Chennai, Hyderabad, and Delhi-NCR. In contrast, the Mumbai Metropolitan Region (MMR), known for its higher home prices, saw a substantial segment of respondents (44%) still opting for 2BHKs. The appeal of one-bedroom homes diminished in certain areas, yet they maintained their demand in MMR and Pune.

“The supply of bigger homes is following the demand for them. Average flat sizes in the top seven cities grew by 11% annually last year – from 1,175 sq ft in 2022 to 1,300 sq ft in 2023. For the first time, the demand for ready-to-move homes is lower than new launches,” said Anuj Puri, chairman, Anarock Group, a property advisory.

Improvement in construction quality and a preference for balconies were among the demands highlighted by more buyers.

The past year set a new record in housing sales, with close to 4.77 lakh units sold across the top seven cities, a 31% increase from 2022. Encouraged by this strong demand, developers launched around 4.46 lakh units in 2023, up from 3.58 lakh units the year before. However, the ongoing real estate boom has led to a reduction in the construction and sale of affordable homes, priced below ₹40-45 lakh.

As a result, the new supply share of affordable housing has significantly contracted over the last two years in the top seven cities, dropping from 26% of total new launches in 2021 to 18% in 2023, a stark decline from 40% in 2019.

According to the survey, while the preferred budget for homebuyers remains within the ₹45-90 lakh range, there's been a growing interest in the premium category, homes priced from ₹90 lakh to ₹1.5 crore. 

The previously strong preference for ready homes, a trend up until 2020, has waned, with buyers now favouring developers with a solid track record of project execution and delivery.