CHENNAI: Chennai seem to have changed their preference from large and medium sized houses to smaller ones — a response to a sharp increase in realty prices.
According to data released by the Reserve Bank of India, the proportion of homebuyers seeking loans from banks and housing finance companies for smaller houses measuring 750sqft and below has gone up significantly in the third quarter of 2014 (September to December). Till September 2014, the preference was for medium-sized houses measuring between 750sqft and 1,200sqft.
It is significant to note that prices of apartments have risen by 11.2% in Chennai during the period, while in other cities like Mumbai homes have become cheaper. The trend of people opting for small houses was seen only in Chennai among the 13 cities from which data was compiled.
Till September 2014, only around 24% of the loans sought by Chennaiites were for small houses. A majority of the loans (around 46%) were for medium houses and the rest (around 30%) for large houses measuring more than 1,200sqft. But between September and December 2014, the trend changed with around 48.9% of the home buyers seeking loans for smaller houses, 27.5% for medium and 23.5% for large houses.
During the period, only 5% to 6% of the home buyers sought loans for smaller houses in Bengaluru, 37% to 38% for medium houses and the rest for large houses. The pattern has remained same in the garden city in comparison to the previous quarters.
"The trend has changed in Chennai definitely in the last two quarters. Till recently most of the builders were concentrating on the creamy layer and constructing ultra, deluxe and large apartments with various extra facilities like swimming pool and gymnasiums. But now the builders need to shift their focus on lower and medium middle-class families who can only afford houses measuring 750sqft and below," said former Confederation of Real Estate Developers Associations of India (Credai) president N Nandakumar.
The main reason for people opting for smaller apartments is the steep increase in prices of homes. "Construction costs have increased several percentage points in the last two quarters. This is being passed on to the buyers in the form of higher prices," said Nandakumar.
As the property prices increase, the customers scale down their plans and go for single-bedroom apartments instead of double-bedroom houses. The RBI survey covered 35 banks and housing finance companies in Greater Mumbai, Chennai, NCR Delhi, Bengaluru, Hyderabad, Kolkata, Pune, Jaipur, Greater Chandigarh, Ahmedabad, Lucknow, Bhopal and Bhubaneswar.
Home buyers in Chennai seem to have changed their preference from large and medium sized houses to smaller ones — a response to a sharp increase in realty prices.