You Should Buy Property Online. Here Are Numbers That'll Convince You.
Owning a home is a dream that is close to our hearts. But, in Indian real estate, the electronic marketplace has not been quick enough in eliminating the middleman. Today, most Indians approach a traditional broker while purchasing a home. Things are not the same in other countries.
According to a data available from SurveyMonkey and TAG Research, over 90 per cent of home buyers in the United States see online real estate portals as their first choice for home search, making these portals a dominant tool. Data further suggest that 40 per cent of these buyers visit websites of brokers, too. This is not yet true in India, but online home sales have now started to pick up. Why are online homes sales increasingly making sense to consumers?
Real estate markets are not known for transparency, even in the West. In India, before the advent of online real estate portals, there was very little publicly available information on real estate prices. Economists have long found this puzzling that middlemen thrive in real estate markets than in other sectors of the economy. The interests of home buyers and brokers are less in harmony with each other.
But, online real estate portals today provide verified information to their visitors. On PropTiger.com, for instance, prospective home buyers can search through properties, filtering them according to price, specifications, amenities, locality and safety and livability score. Using PropTiger's feature, City Master Plan, they can also compare the future development trajectory of localities in which they wish to buy an apartment. Using PropTiger's Android applet PropView, they can see properties at a five kilometre distance by merely pointing their phone in any direction. Using PropTiger's 4D View feature, without leaving their home, buyers can view the particulars of each floor and room in the apartment they wish to purchase. They can also visualise the view from outside, and see how the apartment appears from different angles. Real estate in India is undergoing a revolution, though Internet penetration in India is not yet as high as it is in the West.
To know the prospects of online real estate portals in India, let us look at some data from the developed West where Internet penetration is higher. In the United States, the most dominant tools for home search are online real estate portals and websites of brokers. Other online websites and social networking websites are among the eight most-dominant tools used for home search. Priyanka Joseph, an Indian woman who owns a home in Stamford, Connecticut, recently told PropGuide that she sold her previous home overnight on Craiglist. But, classifieds, newspapers and agents are among the most dominant channels.
But, there is strong evidence that like in other sectors, online tools will replace them. For instance, in Switzerland, from 2006 to 2014, the growth of the share of online sales in retail sales have vastly outpaced the growth of retail sales. But, there has not been a comparable, consistent rise in the growth of retail sales. In the near future, when the electronic marketplace becomes more dominant in the real estate sector, we would see such a transformation in the online real estate space in India, too.
Infographic by Sandeep Bhatnagar
Interestingly, because of the advantages from economies of scale, in the United States, the market share of the most dominant real estate portal has almost doubled from 2011 to 2014. However, the dominant players have changed over years. We would also see such dynamic activity in Indian real estate markets in years to come.
Why so?
In real estate markets in India, most transactions are still made on the basis of personal trust. Advanced markets do not function this way. Transactions ought to be much faster and more transparent. On the Internet, however, transaction costs are much lower. This will be even truer in future. There is great information asymmetry when real estate brokers handle home deals, unlike the Internet. Users can view many comparable properties before they choose.
Major online portals also offer lucrative deals, and run online shopping festivals. On September 7, joining hands with Godrej Properties, PropTiger.com launched its home buying shopping festival, 'The Big Happiness Festival'. You can choose properties in flagship projects of Godrej Properties in cities across India and get discounts up to 17 per cent on apartments. You can also book properties at a token amount of Rs 20,000, and get a 100 per cent refund, if you change your mind within 15 days. The festival also offer freebies such as free open car parking, modular kitchen and possession-linked subvention plans.
It makes great sense to buy homes online now.