Good news for home buyers. After a long time, housing prices are said have started looking north. A recent report by National Housing Bank, for instance, states that housing prices across 50 major cities in India rose by an average 6% during October-December 2018 over the year-ago period.
If that is the case, then the good old days of the nation’s real estate sector seem to be returning again, and it is time for both the developers and home buyers to be happy. However, is this really the case or there is more to it than meets the eye?
Surprisingly, industry experts have a different story to tell. According to them, to say that property prices have begun to rise across cites is not true entirely. In fact, any price rise is subject to various factors, including the city, project location and type, demand for that particular project, etc. For instance, if we look at the primary market price trends of the past two years in the top 7 cities, relatively affordable markets like Bangalore and Hyderabad saw their average prices rise by 6% each in Q2 2019 as against the corresponding period in 2017. However, cities like NCR saw average prices decline by 1% over this period while MMR saw a mere 1% increase in two years.
“Altogether, the average prices in the top 7 cities increased only marginally by 2% in Q2 2019 as against Q2 2017. Average price rise is subject to multiple factors, including scope of growth within a city, employment opportunities therein, project type etc. Also, smaller cities and towns have higher scope for price appreciation than their metro counterparts because prices in metros are already at their peak and builders are cautious not to increase prices as housing sales have just begun to rise,” says Anuj Puri, Chairman, ANAROCK Property Consultants.
By and large, property prices in the primary market may see marginal increase in the quarters to come as affordability has become the new mantra within home buying and demand for affordable housing is at a peak. To bridge the demand-supply gap and boost housing sales, builders will not try and raise the average prices much. However, it won’t be long before they start doing so in order to beat rising raw material costs.
Here is a look at the average prices in the top 7 Indian cities:
Source: ANAROCK Research
What Should Buyers Do Now?
Keeping this in view, what should the home buyers do now? Is it the right time to buy one’s home or should one wait for the prices to rise further?
“It is definitely the right time to buy a property across budget segments — be it for end-use or for investment purpose. Prices are at their lowest best and couldn’t possibly go below the current levels. Moreover, the new GST rates of 1% for affordable homes and 5% for other housing minus the ITC benefits will cause builders to eventually raise their prices when they sense an opportune time. Also, the cost of construction raw materials is rising with an increase in customs duty on various raw materials such as PVC, vinyl floor etc. in the Union Budget. This may eventually put additional pressure on builders to hike prices within residential real estate,” informs Puri.
Moreover, the government has given multiple sops to the housing sector in both the Interim Budget and the recent Union Budget, and one can avail these benefits, including the budget bonanza for affordable housing – an additional tax deduction of Rs 1.5 lakh on interest in housing loan for properties below Rs 45 lakh up to March 2020.
Therefore, experts say, those looking to buy property from an investment perspective need to make their move as soon as possible as realty prices will not get lower than they are now. However, it is imperative to make investments with much thought and research and, if possible, seek professional advice.
“If looking to enter residential real estate, scout for builders with sound financial strength, apt project locations, etc. Other alternatives within residential such as co-living, student housing, etc. can also be viable investment options in the days ahead,” says Puri.
However, notwithstanding what the experts say, the final decision should be yours. Keep the above facts in mind and take your own decision — whether to buy a piece of property now, or wait for some more time!