Even as the government liberalised the interest subsidy scheme for affordable homes last week, builders are going all out to woo buyers with attractive rates on loans. Tata Housing, in association with Indiabulls Housing Finance, promises loans at a shade under 4% in a special offer; this is 350 basis points lower than the rate it offers for other projects. How exactly it would impact the economics for the builder isn’t clear but Tarun Mehrotra, head ( marketing and sales), Tata Housing, said the idea was to nudge fence sitters into some action. “The current home loan rate will kick in after five years,” Mehrotra said. At the last tally the total unsold inventory in the country stood at a staggering six lakh units. Data from PropEquity showed sales were down by 25% at the end of August over November 2016, when the demonetisation exercise was rolled out. In an earlier scheme, Tata Housing assured customers of a rental income for two years; that meant home buyers did not need to pay both an EMI (equated monthly instalments) and rent while waiting for possession. The Delhi-based Supertech too had rolled out a similar scheme.
Godrej Properties too has been luring potential buyers with a loans that builds in a three-year moratorium and a low 10% booking amount. Some builders are willing to waive the goods and services tax, others are willing to not charge extra for higher floors. Lodha Developers promises buyers a saving of nearly Rs 2 lakh for its Dombivili project. In Pune, Duville Estates has announced a ‘No EMI scheme’ in association with HDFC that entails just a 5% booking amount with the rest to be paid on possession. That’s a saving of between Rs 3 lakh and Rs 5 lakh depending on the size of the apartment. In a buyers’ market, companies need to run subvention schemes to win customers said Amit Bhagat, CEO and MD, ASK Property Investment Advisors.
Samantak Das, national director of research at Knight Frank India, pointed out that the reality today is such that buyers are particularly sensitive to pricing. Mudassir Zaidi, ED (north) at Knight Frank India, said yesterday’s free parking slot has been replaced by subventions or low home loan rates. “It’s a question of packaging. In a slow environment, developers have to come up with eye-catching offers but at the end of the day, these are just good old ways of reducing prices,” Zaidi said. The offers are likely to meet with limited success as industry watchers say buyers are waiting for asset prices to correct. Despite freebies housing sales have not recovered from the demonetisation lows. Developers have been under pressure for the past few years to hold launches, execute and clear inventories at discounted prices.