Investors are not interested in putting their money into stagnating real estate. However, for an end-user who is planning to buy his dream home, this pessimistic market scenario can be used to his benefit.
Sentiments among real estate stakeholders have been worsening over the last few months. With the tightening of liquidity, developers have been struggling to offload their inventory which has been piling up over months. The increasing number of delayed and terminally-stuck projects are both a cause as well as effect of the low homebuyer sentiment. Investors are clearly not interested in putting their money into a stagnating sector. However, for an end-user who is on the lookout for home purchase, this pessimistic market scenario can be used to his benefit.
Here we take a look at some of the reasons why this may be the right time to buy one’s dream home:
1. Bargain Deals
Currently, the housing market is experiencing a huge inventory pile-up of ready-to-move-in houses. “With an unsold inventory of more than 1 million homes across India, supply is outstripping demand. It is an out-and-out buyers’ market which leads to a good bargaining power for an interested home buyer. Even on resale deals, due to correction in prices, buyers looking for self-use are likely to get good bargain deals,” says Divya Seth Maggu, Director, Valuation & Advisory Services at Colliers International India.
The property market, in fact, is currently replete with options in both under-construction and ready-to-move projects – and “unlike in earlier years, many of these projects are by reputed developers who deliver on quality in terms of construction, amenities and location. Buyers are indeed spoiled for choice,” says Anuj Puri, Chairman, ANAROCK Property Consultants.
2. Lower Property Prices
According to an ANAROCK study, property prices in India are at their ‘lowest best’ currently and cannot decrease further from here. This is the ‘magic benchmark’ that buyers and investors consistently seek, since a purchase at the lowest price point ensures that prices will rise from there onwards.
3. Low interest rates:
Owing to the consecutive rate cuts by the Reserve Bank of India, the repo rate was slashed for the fifth time this year and revised to 5.15%. The Central bank’s move is expected to further bring down the interest rates on home loans, especially after it mandated all banks to follow its external benchmark from 1st October. Banks like SBI have introduced home loans that are external benchmark-linked, allowing borrowers to get loans for as low as 8.20% interest per annum currently.
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“With the RBI’s recent monetary policy changes, there has been a substantial reduction in home loans interest rates which is certainly creating a stable demand in the market. Moreover, the easy availability of ready-to-move-in projects and additional tax deduction limit announced in the budget have also considerably increased the demand for the ready-to-move-in property,” says Rahul Singla, Director, Mapsko Group.
4. Offers Galore:
Like always, property developers have rolled out various offers and innovative schemes to woo the prospective homebuyers. Although a significant cut in ad spends has been witnessed during this festive season, and there was also no trace of subvention schemes as such schemes have been banned now, however, many realtors are still offering attractive deals and huge discounts on some of their projects which may be a big attraction for the prospective homebuyers during this festive season.
5. Better regulation:
Over the last few years, RERA has extended its protective umbrella over a vast terrain. Buyers interested in under-construction properties because of the lower price points are protected by this law and can invest confidently in any state which has RERA in force. They no longer have to worry about the project getting delayed or altogether stuck, or the developer reneging on any part of the agreed-upon end product.
Developers say that demand for residential and commercial projects increases during the festive season, right from Navratri to Diwali, as it is considered auspicious. “However this time, a slew of buyer-friendly initiatives and policy reforms such as RERA have empowered the prospective homebuyers more than ever and also helped the realty sector gain confidence. After the implementation of RERA, India’s realty sector has become more transparent and accountable. Various policy reforms along with RERA are encouraging the buyers to invest in realt estate, marking this a right time to buy a piece of property,” says Amit Kaicker, Sales Head, DLF, New Gurgaon.
With the introduction of RERA, in fact, the real estate sector has become more organized and transparent. However, buyers need to be cognizant of not making hasty decisions by carefully analysing their purchases. “All project-related information should be checked on the RERA website. It is important to keep in mind the amenities being offered, connectivity of the project and upcoming infrastructure developments to make the most of the deal. With regulatory platforms in place, this due diligence now becomes much easier,” says Maggu.
What to do?
Keeping all these facts in mind, industry experts say that this may definitely be the most appropriate time to invest in a piece of property as home prices may only increase going ahead with the growing demand for property.
“We have seen a huge surge in demand for housing during this season owing to the buyer sentiment turning positive. Also, the RBI decision to cut rates for the fifth time in a row has proved to be a right step at the right time, which will give a boost to the demand for property. The loan borrowers will benefit from the revised home loan rates provided by the banks, which will further ease their decision to invest in real estate. Moreover, developers have also rolled out different schemes and discount offers during this season, which will prove to be beneficial and attract the prospective homebuyers, hence making it a good time to buy property, especially for end-use,” says Ashish Sarin, CEO, AlphaCorp.
Thus, if you are planning to buy a home for your own use and are getting a good deal, then you should definitely go ahead. Home prices may slightly correct going ahead or may even rise — nobody is sure about it. So, why to wait further? However, buyers are advised to take appropriate precaution while investing in a piece of property and buy their dream home only from a reputed developer, who has a proven track record of delivering projects on time as well as not compromising on the quality of construction.