After a pandemic-induced slowdown for almost two years, 2022 turned out to be a good year for the real estate sector. It showed better growth prospects as both demand and supply of residential properties recovered from slump. According to Magicbricks’ PropIndex Report for Q3’ 2022, pan-India residential demand increased by 7.3% YoY, supply grew by 6% YoY and average prices increased by 9.1% YoY. Residential demand in cities such as Greater Noida (9.9%), Gurugram (3.7%), Bengaluru (3.7%) and Mumbai (1.9%) also exhibited QoQ growth. The current festive season is considered auspicious to invest in real estate assets and with these signs of growth, we anticipate that the demand for residential properties will increase in this season.

Investment in residential real estate has always been the most preferred and trusted investment choice. With anticipation of increasing prices in the future, many are finding it an opportune time to invest in residential properties. Purchasing a house is probably one of the most important decisions we take in our lives. Since real estate is a high-value investment, here are some things to keep in mind to make the right decision.

1. Extensive research: Research is critical to make informed decisions especially for high ticket investments such as real estate. There are several factors to keep in mind such as location, project, builder history, local laws, and surrounding areas. It is advised to refer to verified and expert sources. One can refer to reliable and trustworthy industry reports such as the ones issued by RERA. In addition to this, Magicbricks publishes quarterly PropIndex reports which are welcomed by customers as an extensive repository of trends from 13+ cities and their micro-localities.

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2. Understanding expenses and documentation: Documentation is an important consideration while finalizing your dream home and understanding the expense line-items is crucial to arrive at the actual costs of the property. Taxes, government fees, registration charges are some of the considerations which can increase the cost by as much as 25-30%. It is advised to research, understand the expenses associated with buying a house and engage appropriate legal counsel.

3. Financial planning: Planning the finances before investing in real estate is recommended as these are high ticket investments. Apart from cost of purchase, there could be associated costs such as maintenance, renovation, upgrades etc. along with home loan EMIs. Evaluating the credit score is advised as best loan rates are given to customers with a credit score of 750 or more. There are also many tax benefits for first time home-buyers which can be capitalized.

These include deduction on principal amount repaid, deduction on stamp duty, deduction on interest repaid etc. A popular rule which can help in financial planning is the 50-30-20 rule. The rule states that 50% of the take-home salary can be reserved for fixed expenses, 30% of the salary for discretionary expenses and the balance 20% for savings which can contribute towards a corpus fund for down payment of the home.

4. Explore all options: Almost all the developers extend exciting offers and deals to attract customers to their offerings. While this makes the festive season an opportune time to invest, one should not restrict themselves to just these offers. It is a good practice to explore and compare all options to make the best decision for the long run.

To conclude, it’s important to consider all these factors and ensure short-term requirements and long-term goals are aligned. Preparedness is key to making rewarding real estate investments.

(By Hitesh Uppal, Head of Finance, Magicbricks)