Barring a few unfortunate incidents in real estate, the dice seems to be loaded in favour of homebuyers currently. However, is it the right time to invest in real estate?
Barring a few unfortunate incidents of some housing projects getting delayed or some builders going bust, the dice seems to be loaded in favour of homebuyers currently. For instance, over the past one year, significant rationalization of property prices has been seen in many parts of the country, and property has now become affordable for a larger section of aspiring buyers. Home loans are also available at a ten-year low, while the implementation of RERA and GST has given consumers a sense of security. In view of all this, is it the right time to invest in real estate?
Industry experts say that with demonetization, RERA and GST, it is definitely the right time to invest in real estate as the sector is organized like never before. The post demonetization halt was a temporary phase in the real estate sector and in a dynamic market like India, where innovations overtake challenges, the after-effects are bound to witness newer horizons. In the sector where a majority of the transactions were cashless now have a positive takeaway, there is confidence in substantial properties and buyers are witnessing a realistic pricing across property segments.
“As RERA promises on timely delivery, transparency of the project and accountability, the sector is already witnessing a lot of positivity. All the project-related information will now be available for public knowledge, right from the current phase of the project, to the permissions acquired or pending by the developer etc. With RERA the sector is all set for a 360-degree change, as it gives consumers a sense of security who invest their hard-earned money into real estate,” says Manju Yagnik, vice-chairperson of the Nahar Group.
GST is also likely to make the sector more transparent. Earlier the real estate sector was heavily taxed. Therefore, according to experts, a single tax structure on under-construction properties is definitely a welcome move. The reform is expected to infuse accountability and confidence among the buyers, which will make the sector healthier for domestic as well as foreign investors.
Should you buy?
It is true that the recent approval of RERA norms in many states is leading to a wait-and-see sentiment among developers as well as buyers. Experts also expect RERA and GST-compliance to remain a challenge for several developers for at least the next six months. However, if someone wants to buy a home for personal use, then it definitely seems to be the right time to buy one’s home.
“After the recent bank rate cut by the RBI, we do not expect any further rate cut in H2 2017. Also, the prices have been stabilised in most markets, and any further reduction is unlikely. Thus, we advise buyers to expedite their buying decisions and take advantage of lower interest rate regime. The first-time homebuyers can also get benefit from the incentives under the Pradhan Mantri Awas Yojna (PMAY),” says Surabhi Arora, senior associate director-research, Colliers International India.
However, in view of the current scenario, one should try to buy a ready-to-move-in flat rather than an under-construction apartment. “With a dip in property prices in the last couple of years and a high unsold inventory, it is a good option for buyers to invest in a ready-to-move flat, rather than wait for a new project to come up over a period of time. GST will free homebuyers and investors from the hassle of paying several state taxes at different levels, therefore removing the double taxation impact,” says Yagnik.
It is also in your own interest to buy property only in RERA-compliant projects and carry out all of your transactions only through registered real estate agents.
Property consultants say that as the economy gathers further impetus and the real estate market recovers faster, bringing with it inevitable price escalations, locking into the currently prevailing low rates is the best possible investment choice. “Even extended suburbs will densify over the coming years, adding both better social infrastructure while simultaneously bringing forth a dearth of supply due to depleting land. As our cities widen, today’s extended suburbs will become more central locations. Buying a property in such locations now will lock in their future potential,” informs Anuj Puri, chairman, ANAROCK Property Consultants.
However, if you want to buy a piece of property for investment purposes and quick return, then you should wait for some time to see where the market is headed.