Understanding Consumer Psychology and Pricing Elasticity in Real Estate

Author: Vikram Kotnis
Understanding Consumer Psychology and Pricing Elasticity in Real Estate

Real estate majorly revolves around the location of the property, and pricing has generally been the key factor. However, it’s crucial to consider another significant aspect, which is consumer psychology. A detailed understanding of the consumer psychology influencing pricing elasticity is essential, as real estate reflects the overall health of the economy.

For example, in 2022, the demand for 3 BHK homes was high because the economy, especially the tech sector, was thriving. Young professionals, around 28 years old, earning between 30 to 40 lakhs were investing a major part of their income in homes, cars, and travel. Homes were a priority, symbolizing status and stability. Fast forward to 2023, the demand for 3 BHKs dropped by more than half. Despite still earning 40 lakhs, individuals became cautious due to news of layoffs and economic uncertainty. Understanding the consumer’s thought process is now crucial when planning or pricing projects.

To illustrate this, let’s look at PCMC and the surrounding localities of PMC, representing West Pune’s real estate trajectory. Analyzing registrations from Sep-Oct 2022 and comparing them with 2023, we observe a significant decline in real estate sales in previously popular areas like Wakad, Balewadi, Rahatni, and Thergaon. In contrast, Tathwade, Punawale, and Ravet have experienced an upswing, possibly influenced by a mix of inventory and increasing prices. Interestingly, Hinjewadi has defied the trend, with volumes increasing despite rising prices. This data emphasizes the need to adapt strategies based on consumer behavior and market dynamics.

Real Estate Project-Wise Analysis: Key Metrics and Trends

Project Transaction (Sept-Oct ’23) Project Features/Sales Strategy Average APR Micro Market
GK Aarcon 369 Affordable Segment, Nearing Possession, Compact Homes 5100 Punawale
Kolte Patil – Life Republic 174 Smaller Sizes, Township Experience, Higher AOP & Marketing Costs 5300 Marunji
Unique K Town 84 Majority 2 BHKs 5132 Kiwale
Gini Vivante 77 Majority 2 BHKs & Compact 3 BHKs, 17 Acre Township 5173 Kiwale
Mangalam Melizma 69 Majority 2 BHKs & Compact 3 BHKs & Local AOPs 4710 Kiwale
Vivanta Yashada Windsong 61 Mid to Premium Segment, yet Majority 2 BHKs Sold 5950 Ravet
Jhamtani Ace Atmosphere 56 Mid to Premium Segment, yet Majority 2 BHKs Sold 5775 Aundh-Ravet BRTS Road
Kolte Patil Little Earth 53 Only 2 BHKs Sold with few compact 3 BHKs, Township Style Layout, Higher AOP & Marketing Costs 5012 Mamurdi
Shri Om Manglam Chaitanya 52 Only 2 BHKs Sold 4733 Kiwale
Jhamtani Ace Abode 45 Mid to Premium Segment, yet Majority 2 BHKs Sold 4790 Kiwale
Kohinoor Westview Reserve 44 Higher AOP, Higher Marketing Costs, Celeb Tie-Ups 6170 Tathawade
Lodha Hinjewadi 44 Brand Pull, AOP, & Operational Costs are higher 7600 Hinjewadi PH1
VTP Earth 1 44 Higher AOP & Marketing Cost, High Marketing Cost 7200 Mahalunge
Sai Bliss (Punavale) 41 Affordable, Nearing Possession 5100 Punawale
Kohinoor Coral 39 Affordable & Nearing or Ready, Small Carpet Sizes 5400 Hinjewadi PH3
Pebbles Greenfields 37 Higher AOPs & Sizes a= controlled of 2 & 3 BHKs 6750 Tathawade
Aishwaryam Insignia 35 Affordable & Small Carpet Sizes 5300 Aishwaryam Insignia
Kohinoor Famville 32 Higher AOP, Higher Marketing Costs, Celeb Tie-Ups, Etc 5780 Hinjewadi PH2
Nirman Astropolis 32 Premium Segment 6600 Aundh-Ravet BRTS Road
Mahindra Happinest Tathawade 30 National Brand, Smaller Sizes, 1 & 2 BHK, 470-680 sq.ft 6126 Tathawade
Pegasus Megapolis Mystic 27 Township Layout, Larger 2 & 3 BHKs, NRI Tie-Ups, Higher AOPs & Referrals 5821 Hinjewadi PH3
Rohan Nidita 26 Hinjewadi PH1, Brokerage driven, controlled marketing cost 6800 Hinjewadi PH1
Tulip Infinity Avana 24 2, 3 & 4 BHKs. Optimal sizing larger layout, high brokerage, good referral 7300 Aundh-Ravet BRTS Road
Shapoorji Pallonji Sensorium 23 Brand Pull, AOP, & Marketing Costs are higher 7490 Maan Road
Mihir Amara 22 Location Pricing advantage, spillover from Baner and Balewadi 6770 Wakad
Roshan Milestone 21 Affordable Segment with Compact Homes 4000 Punawale
Unique K Shire 21 Optimal Sizes & Larger layout gets Wakad spillover 5700 Punawale
Pegasus Megapolis Serenity 20 Only Compact 2 BHKs sold, Township Layout, Higher AOPs 5530 Hinjewadi PH3
Pharande Puneville 20 Large Layout & Pricing optimal, gets Wakad spillover due to location 5600 Punawale
Shree Sonigara Signature Ritz 20 Large Carpets, Higher brokerages 7150 Aundh-Ravet BRTS Road
Pride Purple Park Titan 19 Brand, Larger planned development, Higher Brokerages 6770 Hinjewadi PH1
Krisala 41 Zillenia 18 Decent 2 BHK & Compact 3 BHK, Higher Marketing Costs & AOPs 5216 Punawale

Types of Buyers and Location Preferences

  1. PCMC Buyers Preferred Locations:

    • PCMC Buyers preferred location Encompass crossing a highway.
    • Wakad
    • Ravet
    • Mamurdi

    Migrant Buyers Preferred Locations:

    • Hinjewadi
  2. Affordable Segment Bubble:

    • Punawale
    • Tathawade
    • Ravet

Factors Influencing Consumer’s Buying Preferences

  1. Affordability

    The shift in demand towards Punawale, Tathawade, and Ravet indicates a preference for more affordable housing options. Consumers are becoming increasingly conscious of their budgets, especially in times of economic uncertainty.

  2. Inventory Mix

    Locations experiencing an upswing, like Tathwade and Kiwale, are likely driven by a well-balanced inventory mix, offering a variety of 2 BHKs and compact 3 BHKs.

  3. Brand Pull

    Despite higher costs, in certain areas like Hinjewadi continue to attract buyers due to brand pull. Projects like Lodha Hinjewadi and VTP Earth 1 showcase the influence of a strong brand presence.

  4. Marketing Strategies

    Higher marketing costs and tie-ups with celebrities are observed in projects like Kohinoor Westview Reserve, indicating the significance of effective real estate marketing strategies in influencing buyer decisions.

  5. Location Advantage

    Spillover effects from neighbouring areas contribute to the success of projects like Mihir Amara and Pharande Puneville. Buyers are drawn to locations with pricing advantages and proximity to established neighborhoods.

Pricing Elasticity Insights

  1. Compact Homes Trend

    The data reveals a trend towards compact homes, driven by factors like affordability and optimal sizing. Projects like Unique K Town and Sai Bliss exemplify the demand for more manageable living spaces.

  2. Township Experience Appeal

    Developments with a township experience continue to attract buyers, emphasizing the enduring appeal of holistic living environments.

  3. Shift in Volume

    The normalized carpet to saleable ratio and Average Per sq.ft. Rate (APR) calculations help identify shifts in volume and pricing trends, offering valuable insights for developers and investors.


Understanding consumer psychology and pricing elasticity in real estate requires a sophisticated approach. By considering the type of buyer, location preferences, and various influencing factors, developers can adapt their strategies to meet the evolving consumer demands and market dynamics. The data-driven analysis depicted here serves as a guide for stakeholders navigating the ever-changing real estate landscape in West Pune.


Vikram Kotnis

Vikram Kotnis is an accomplished business leader, entrepreneur, and technology enthusiast. As the Executive Chairman & MD at BeyondWalls, Vikram has made an indelible mark in the realms of Real Estate and Property Technology. With a remarkable career spanning over 21 years, he excels in fostering and scaling businesses.

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Comments (3)

Amar Jain

Good read on how consumer psychology impacts real estate pricing. All in all understanding buyer perceptions is crucial in today's market.

Ramesh Rasne

Simply wish to say your article is as amazing The clearness in your post is just nice and i could assume you're an expert on this subject.

Shashank Todwal

This article provides valuable insights into real estate dynamics, offering a detailed understanding of consumer behavior and market trends.