This Is A Great Time To Buy Homes. You Shouldn't Wait Any Further.
It is a buyers' market. Real estate prices have been stagnant for a while. Developers are luring buyers with attractive offers. Every real estate investor knows that the best time to buy homes is when they are underpriced. But, if prices are stagnant, this does not prove that prices would soon rise. How can buyers be reasonably sure that prices would not decline further?
A good rule of thumb is to look at how sophisticated investors are behaving. Are they buying or selling? In the recent past, many private equity (PE) firms have been buying apartments at huge discounts. This means that they expect high returns, adjusting for the risk. Recently, Indiareit Fund Advisors Pvt. Ltd launched a fund to buy under-construction properties in India at bulk.
But, even then, isn't it true that there are great risks involved in buying under-construction properties? Not quite. Some real estate developers offer to pay the pre-EMI (equated monthly instalment) interest, if you pay 20 per cent of the price of the flat upfront. Real estate developers offers many flexible payment schemes that assuage the risk home buyers bear. In a buyers' market, home buyers should negotiate with builders to get the best possible deal. Bargain when you are in a position to do so.
Are there other good reasons to buy now?
The Indian economy is performing better after a slump, and it is expected to grow faster in the years to come. The Indian economy has overtaken the Chinese economy to become the fastest major economy in the world. Read the Editor's Note: Hope floats for real estate as Indian economy grows. If growth accelerates, real estate prices are likely to rise. The current account deficit and fiscal deficit are declining, too. Read more on how such macroeconomic factors influence real estate prices.
But, is this all? Inflation has been declining too. Before Raghuram Rajan became the Reserve Bank Of India (RBI) governor, inflation was at unusually high levels for years. Since early 2006, inflation was never below the acceptable level till recently. But, in July 2015, Consumer Price-based Inflation (CPI) declined to 3.76 per cent. The RBI had not cut the repo rate from May 2013 till January 2015. But, since then, the repo rate declined by 75 basis points. Leading Indian banks have recently cut the interest rate by as much as 35 basis points, even though the RBI left the repo rate unchanged in August. Here is a Guide to floating interest rate loans at leading Indian banks. As inflation has been falling almost consistently, rates are likely to decline even further. But, when mortgage rates fall, sales will rise too, raising property prices. Or, would it? Do low interest rates help home buyers? Don't wait for further rate cuts to buy a home, says Emaar MGF VP-Sales.
The government is also trying to make real estate players in India more accountable. The Realty Bill may become a reality soon. Recently, a builder in Pune was asked to compensate a home buyer because the approved plan was altered. On September 5, the Noida Authority said that home buyers could make builders accountable if they altered the outlay. These are good signs. Real estate markets need clear regulatory norms.
Many analysts, however, have been claiming that builders are sitting on unsold stock without cutting prices, and that markets would soon crash. Should home buyers wait till prices fall? No. The truth is more complicated than that. In the long run, real estate price appreciation has been high in most Indian cities. But, since the third quarter of the FY 2012-13, home prices have not appreciated much. Price correction in the real estate market has already happened. Here is how.
But, how would you get the best possible deals while buying homes?
Joining hands with Godrej Properties, PropTiger.com has launched an online home shopping festival, 'The Big Happiness Festival'. The shopping festival will run from September 7 to 14, and Godrej Properties will list its flagship residential projects in Indian cities like Ahmedabad, Bengaluru, Chennai, Gurgaon, Kolkata, Mumbai and Pune. The 'Big Happiness Festival' will offer you the best possible deals of this season. You can book properties with a token amount of Rs 20,000 and get discounts up to Rs 17 lakh. But, if you change your mind within 15 days, you will get a 100 per cent refund. The shopping festival offers attractive gifts like free open car parking, modular kitchen, and possession-linked subvention plans. You will also get gift vouchers worth Rs 40,000.
Within hours of launch, we received over 2,000 registrations. Shouldn't you buy when PropTiger.Com and Godrej Properties come together to spread happiness?