Are you planning to buy a second home or interested in investing a property that can work as a vacation home, but confused if this is the best time. The confusion is justified as demonetisation brought a negative impact on an already sluggish real estate market. The entire sector came almost to a standstill and the sales volume of 2016 came down by 9 per cent in the last two months of the calendar year. According to JLL, 2016, which was performing better than 2015 before demonetisation became the worst year for real estate in terms of sales. Investment in second home was also on the upswing before demonetisation.
With the curb on currency and extra cash vanishing from the market, the appetite for second homes also reduced. Only buyers with legal sources of income and an appetite to invest through legal channels are currently interested in buying a second home.
Now, with the implementation of Real Estate Regulation Act (RERA), there is a sense of positivity in the market. Experts also expect a turnaround in the real estate market on the back interest rates coming further down, government getting strict with Benami property holders and correction in prices. “Demonetization has resulted in price corrections not only in the primary market but also the secondary market. An estimated 10-15% price correction has already happened in this segment, and more can be expected,” Ashwinder Raj Singh, CEO – Residential Services, JLL India said.
He further added that buyers have started coming back onto the primary sales market, with sales enquiries rising visibly in the past two months. An increase in the supply of affordable housing is on the charts, thanks to infrastructure status now having been given to affordable housing. With prices already having come down, further corrections and more stability expected in next 6-12 months, developers are expected to offer better discounts and attractive schemes to convince fence-sitters to start investing.
For those planning to buy a second home or vacation home, this time could be the best. Ashwinder Raj Singh elaborates, “Those planning to buy a second home as an income-generating asset or for capital gains currently, the market is still attractive if considered from a long-term perspective and provided they sort out their investment plans and put their finances in order. For those intending to buy a vacation home for their personal enjoyment, the market in terms of pricing advantage is eminently favourable right now and will improve even further.”