The Real Estate Regulation Act that came into force on May 1, 2017 has brought in hope of a revival in the real estate sector, especially the residential housing. However, a homebuyer should keep in mind that RERA is a process and not an event and so the industry would take time in absorbing all the provisions of the Act. What would also become important going forward would be impact of Goods and Services Tax (GST) on the sector after it comes into a force on the expected July 1, 2017 deadline. In addition to this, what also needs to be seen is what would be the impact on the prices with both the Act and the tax implementation going forward.
These factors would obviously confuse the buyer, especially the first time buyers if this is the best time to buy or he/she should wait. According to JLL, the real estate sector, which was going through a tough time since past 2-3 years, saw a positive turn in H1 2016. Compared to H1 2015, the period saw a 7 per cent jump in volumes, with price corrections in the top 8 cities resulting in better sales and reduction in unsold inventory. The introduction of demonetization impacted the entire real estate sector negatively for a short while as all activity came almost to a standstill. However, there is a rebound and markets slowly moving towards revival. Developers too are taking measures like giving discounts and reworking on the prices to woo the homebuyer.
On current market scenario, Kishor Pate, CMD – Amit Enterprises Housing Ltd, said,”At the present time, the real estate market in most cities is flush with options for buyers in most price brackets, and developers have also kept various offers and schemes in place to maintain the sales momentum. Prices have corrected in most locations, and projects which seemed too pricey only a year ago are suddenly quite affordable. Indeed, buyers have every reason to view this as a very favourable time for home purchase.”
Pate further added that anticipation of price corrections and lower interest rates have kept many potential buyers on the fence and RERA may have the same effect on the homebuyers as they may adopt a wait and watch policy to see its impact on the sector. He advises the homebuyers to check the developer’s website before buying a home to see if they are RERA complaint. “A builder’s depth of credibility on the market has always been the foundation of his success – and it will be even more so in the post-RERA era,” he added.
A homebuyer should also do a thorough check of the property they are investing in along with a background check of the developer. After RERA, only builders with sound reputations will remain in the real estate business. RERA’s full impact would take long as real estate agent(who also fall under its ambit) are still in the process of registering under RERA, states still need to fall in line and adopt the Real Estate Regulation Act in letter and spirit – and, most importantly for buyers, developers need to register their projects under RERA. These things cannot happen instantaneously.
So the final question. Is the best time to invest? There is no doubt that RERA has given a sense of security to homebuyers, but an investment in a property that is complete with a sound developer will make for a good decision. In words of Pate, “There is no need for aspiring homebuyers to wait for more clarity on RERA to emerge. It is certain that RERA will clean up the market – and it is equally certain that it is only strong, reputed developers will be able to do business in the future. The soundest strategy for buyers is to identify projects by these builders which are either complete or in advanced stages of completion, and make use of the very favourable market conditions existing now to close the deal on their dream home.”