Ready-To-Move-In Homes Are Back As Buyers' Favourite

For a number of reasons, under-construction properties became a preferred choice among Indian homebuyers in the past decade. By investing in an under-construction project, a buyer gets to have a brand-new home for himself, at an affordable rate. Additionally, he will have a grand platter in front of him to choose from. From an investment point of view also, investing in an under-construction unit is more beneficial as the future prospects of a new property will certainly be brighter.

However, as project delays became a defining feature of India's real estate sector over the years, under-construction projects begun to lose their popularity among buyers.  

Data testify the same.

Numbers available with PropTiger DataLabs show sale of ready-to-move-in properties continued to grow in the first half of the current financial year while the sale of under-construction properties continued to fall during the same period.  In the second half of FY17, 16,750 ready-to-move-in units were sold. The number grew to 19,399 in H1 FY18. On the contrary, only 84,408 under-construction properties were sold in H1 FY18 against 94,043 units in H2 FY17. The numbers are based on home sales in nine major cities of the country which include  Ahmedabad, Bengaluru, Chennai, Gurgaon (including Bhiwadi, Dharuhera and Sohna), Hyderabad, Kolkata, Mumbai (including Navi Mumbai and Thane), Noida (including Greater Noida and Yamuna Expressway) and Pune. Data also show that even in under-construction units, buyers are more interested in old projects than newly launched ones.

Now, project delays are not the only reason why resale homes have now become buyers' favourite.

Are under-construction homes more affordable? Not really?

The cost of buying an under-construction property may jack up owing to multiple reasons. For example, an under-construction home ceases to be more affordable in comparison with a resale home if the purchaser has to simultaneously pay house rent for a much period than he might have initially expected.

Also, in the previous tax regime, a buyer has to pay service tax and value-added tax on the purchase of an under-construction property. Buyers now have to pay a goods and services tax on such purchases. So far, resale homes are outside the purview of the tax regime.

You don't really have to buy an old home in resale

As consumers turned into fence-sitters, the number of unsold housing units kept swelling across major Indian cities, data show. From 35 months in the Q2 Fy17, inventory overhang has increased to 42 months in Q2 FY18. This means a buyer does not need to buy an old home that has been previously occupied by someone. He has an easy availability of brand-new homes which developers are selling on heavy discounts. Not to mention the fact that this buyer will spare himself all the anxiety of waiting to get possession.

Also read: Ready-To-Move-In Or Under-Construction House: What To Buy?