Consumer Buying Patterns in the Affordable Housing Market

 

Yash Naik ¹, Dr. Vishal Chavan ², Dr. Bhawna Sharma ³

 

¹ BBA General, Amity Business School, Amity University Mumbai, India

² Associate Professor, Amity Business School, Amity University Mumbai, India

³ Director – International Affairs and Programs Officiating Head of Institution, Amity Business School, Amity University Mumbai, India

 

1. INTRODUCTION

Affordable housing has emerged as one of the fastest-growing sectors within the Indian real estate market. Urban migration, increasing nuclear families, and rising aspirations for homeownership have contributed to growing demand for low-cost and mid-segment housing. Government interventions such as Pradhan Mantri Awas Yojana (PMAY), credit-linked subsidies, and tax incentives have encouraged both buyers and developers to invest in this segment.

Consumer buying behaviour in the affordable housing market differs significantly from luxury or premium housing. Buyers are more price-sensitive, highly risk-averse, and dependent on longterm financing. Their decisions involve rational evaluation—budget, EMI affordability, loan approval—as well as emotional considerations such as security, stability, and perceived social mobility.

Digitalization has also transformed the decision-making process. Consumers now rely heavily on online reviews, virtual site visits, digital marketing content, and social media impressions. This behavioral shift mirrors trends identified in other sectors where digital consumption patterns affect purchase decisions.  

Understanding these evolving buying patterns is essential for developers, policymakers, and financial institutions to deliver better housing solutions and cater to shifting consumer expectations.

 

2. Review of Literature

Multiple studies emphasize that buying a home is one of the most significant financial decisions for individuals. The literature identifies several determinants impacting purchase intentions in the affordable housing sector:

 

2.1. Price Sensitivity and Financial Constraints

Consumers in the affordable housing segment priorities price, EMI affordability, loan eligibility, and long-term financial commitments. Studies show that middle-income buyers evaluate properties through a strict financial lens, comparing repayment capacity with household income.

 

2.2. Location and Connectivity

Proximity to workplaces, schools, public transport, and essential services strongly influence decision-making. Affordable housing often develops city outskirts; hence connectivity becomes a major determinant.

 

2.3. Builder Reputation and Trust

Just as industrial B2B buyers depend on relationship-based trust building, homebuyers place strong emphasis on builder credibility. The presence of previous successful projects, transparent communication, and on-time delivery increases consumer confidence.  

 

2.4. Digital Influence on Property Buying

Growing digital access, online payment behaviors, and virtual evaluation patterns affect residential buying decisions. Research on digital spending behavior shows that instant information access and digital convenience reshape consumer psychology. This behavior mirrors real estate buyers who increasingly begin their property search online.  

 

2.5. Government Policies

Affordable housing demand is significantly stimulated by subsidies, relaxed loan norms, reduced interest rates, and PMAY benefits.

 

2.6. Emotional Drivers

Homeownership is viewed as a symbol of stability, security, social progress, and long-term wealth creation.

The literature suggests that affordable housing purchase decisions result from a combination of financial feasibility, emotional security, and external incentives.

 

3. Objectives of the Study

Primary Objective

·        To analyse consumer buying patterns in the affordable housing market.

Secondary Objectives

·        To identify key factors that influence homebuyers’ decisions in the affordable housing segment.

·        To study the role of financial considerations such as EMI affordability and bank loan access.

·        To examine the impact of builder reputation and property location on consumer choice.

·        To evaluate how digital platforms influence homebuyers’ evaluation and selection processes.

·        To provide suggestions for improving customer experience and decision satisfaction.

 

4. Research Methodology

4.1. Research Design

The study uses a descriptive and analytical research design similar to prior academic formats.  

 

4.2. Nature of Data

The study relies exclusively on secondary data, including:

·        Academic journals

·        Industry publications (NAREDCO, CREDAI, Knight Frank)

·        Government reports (Ministry of Housing, PMAY)

·        Real-estate market studies

·        Newspapers and research databases

 

4.3. Data Collection Method

Secondary data from published literature, online property portals, government housing reports, and consulting firm insights constitute the primary information base.

 

4.4. Data Analysis Technique

·        Content Analysis to identify themes influencing buying patterns

·        Comparative Analysis inspired by techniques observed in the reference PDF research papers  

·        Trend Interpretation of consumer behavioural changes in a digitalised market

 

 

4.5. Scope of the Study

The study focuses on urban and semi-urban affordable housing between ₹10 lakh to ₹45 lakh price segments in India.

 

5. Data Analysis and Interpretation

5.1. Key Factors Influencing Buying Behaviour

5.1.1.   Price and EMI Affordability

The most dominant factor is affordability. Buyers evaluate properties based on:      Total price

·        EMI amount

·        Down-payment requirement

·        Interest rates & loan eligibility

Middle-income buyers display predictable financial behaviour—similar to trends seen in digital transaction studies where spending patterns reflect convenience and affordability.  

 

5.1.2.  Location Advantage

Studies show buyers prefer projects offering:

·        Good connectivity to workplace

·        Public transport availability

·        Nearby schools, hospitals, markets

Affordable housing clusters near industrial areas and developing corridors attract working families.

 

5.1.3.  Builder Trust and Project Transparency

Consumers strongly value:

·        RERA registration

·        Construction quality

·        Track record of on-time delivery

Trust plays the same central role as seen in B2B sales research.  

 

5.1.4.  Digital Research and Online Influence

More than 70% of homebuyers begin their search online—similar to findings in B2B digital behaviour research.  

Virtual tours, Google reviews, YouTube walkthroughs, and digital brochures influence buyer expectations.

 

5.1.5.  Financing and Government Subsidies

PMAY subsidies (up to ₹2.67 lakh) significantly motivate first-time homebuyers. Home loans with lower interest rates also increase purchasing confidence.

 

 

5.2. Consumer Behaviour Trends

5.2.1.  Preference for Ready-to-Move Homes

Due to construction delays and past fraud cases, buyers prefer ready units to avoid risk.

 

5.2.2.  Shift Toward Smaller, Functional Homes

Compact 1BHK and 2BHK units with maximum space utilization are in high demand.

 

5.2.3.  Safety and Security Concerns Post-Pandemic

Gated communities with CCTV, controlled entry, and emergency services are increasingly preferred.

 

5.2.4.  Online Decision-Making

Consumers often shortlist properties digitally before making physical visits.

 

5.3. Interpretation

The analysis indicates that affordable housing buyers are:

·        Highly financially disciplined

·        Influenced by risk avoidance

·        Driven by online evaluations

·        Motivated by government incentives

·        Dependent on EMI affordability

Consumers behave more rationally in this category, balancing cost, location, and trust— supported by behavioural theories in both provided reference papers.  

 

6. Findings

1)     Affordability is the primary decision factor.

Consumers evaluate long-term financing capacity thoroughly.

2)     Location and connectivity significantly influence buying behaviour.

3)     Digital platforms shape early-stage decision-making, mirroring trends found in other sectors.  

4)     Trust in builders is essential, especially regarding construction quality and possession timelines.

5)     Government subsidies and housing policies increase market attractiveness.

6)     Consumers prefer ready-possession homes due to reduced risk.

7)     Emotional factors—family stability, long-term investment, security—strongly influence final decisions.

 

 

 

 

7. Conclusion and Suggestions

7.1. Conclusion

Consumer buying patterns in the affordable housing segment are shaped by financial, emotional, and environmental factors. Buyers prioritize price, EMI commitment, connectivity, and builder reliability. Digital influence plays a major role in the initial evaluation process, while on-ground verification drives final decisions. The affordable housing market is expected to continue growing due to strong demand, technological adoption, and government incentives.

 

7.2. Suggestions

For Developers

·        Improve transparency through regular updates, RERA compliance, and clear documentation.

·        Offer flexible payment plans aligned with buyer financial constraints.

·        Strengthen digital marketing and virtual tour experiences.

For Government and Policy Makers

·        Expand subsidy schemes and reduce loan processing barriers.

·        Improve infrastructure in developing affordable housing zones.

For Homebuyers

·        Conduct thorough financial planning before committing to EMI.

·        Verify builder track record, RERA status, and legal clearances.

·        Use digital tools for initial research but verify details physically.

 

CONFLICT OF INTERESTS

None. 

 

ACKNOWLEDGMENTS

None.

 

REFERENCES

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NITI Aayog. (2023). Affordable Urban Housing Strategy in India (Policy paper). Government of India.

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