It’s likely that serious home buyers will benefit most from low interest rates and a clinging housing market. However, with the resurgence of the Coronavirus, many prospective buyers are still confused and wary of purchasing a home.
Is there a right time to buy a home?
A home acquisition is not only a financial, but also a very personal decision; it is often the largest investment of our lives. Rather than timing the purchase, end-users should consider the location, infrastructure, developer track record, and amenities.
Home prices would rise and fall, and making a smart investment would be more important than whether it was a good time to buy. The majority of home purchases are driven by a need and not by economic conditions.
Increasingly, people don’t have to live in the central business districts anymore because peripheral locations and infrastructure have developed there.
The affordability index (EMI/income) in India is at an all-time low. While income has increased over the last five years, interest rates and property prices have remained almost unchanged.
This is why EMIs have also decreased. As a result, people are upgrading to larger homes and thinking about purchasing their first home, 80% of those who applied were first-time home buyers.
Will property prices go up?
While the COVID-19 pandemic kept property prices relatively stable, experts predicted that they would soon firm up due to rising input costs such as steel, copper, nickel, cement, labour charges, and other construction materials.
Since January 2020, the cost of construction in Thane and Mumbai has risen by up to 12%, making it extremely difficult for developers to further reduce costs in line with customer expectations.
Globally, housing prices are rising. Property prices in Western markets are at 14-year highs. India will likely follow the same trend, as developers’ prices will rise to keep up with rising input costs.
Even though some property markets remain flooded with unsold inventory, property prices have not fallen.While demand-supply economics suggests that there must be some stabilising effect, property experts disagree.
When discussing the inventory overhang, Pansari stated that it was primarily due to the quality of the product on the market.
“Why would someone buy an inferior product if there is something better available on the market that comes with a guarantee and warranty?” This is yet another reason why property prices will not fall,” Pansari added.
Joshi went on to say that there was a lot of brand consolidation going on in cities like Bengaluru, with small players being forced out of the market and larger developers with proven track records increasing their market share. This would also raise property prices in the near future while reducing the inventory overhang of high-quality housing.
Ghosh also mentioned that not all inventory was for sale. “People must understand that not all inventory on the market is equal and should take into account in light of quality and construction. This is why price cuts and oversupply can never go hand in hand,” Ghosh explained.
When asked about the trends in home loans, Garyali stated that interest rates on home loans would remain constant. He emphasized that the interest rate regime was very transparent, as all home loans involve the repo rate, as directed by the Reserve Bank of India, and presented to home loan borrowers.
Where should you invest?
The right time for investing in a luxury property is now, says Joshi, since there is ample room for negotiation. He went on to say that buyers of affordable housing who qualified for a subsidy under the PMAY could consider purchasing right away. New infrastructure would be the best option for investors and end-users, he said. “East and north Bengaluru are the most preferred areas for Bengaluru due to IT development and an upcoming industrial park, respectively. Joshi advised choosing IT corridors in Hyderabad like Gachibowli, finance districts, and central areas.
Under construction vs ready to move: What should you choose?
The developer should be trustworthy and have a good track record if the project is under construction. Some areas, such as Noida Sector-150, where every project was under construction, should be avoided by buyers. Investing in under-construction projects is a good idea because interest rates are low and under-construction units are less expensive.
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What is the ideal home loan product?
While interest rates on home loans have decreased, eligibility has not. People who were careless with their finances were still having difficulty getting home loan approvals, according to the panellists. It is untrue that the pandemic harmed people’s credit ratings. There were applicants whose credit scores improved due to avoiding unnecessary interest costs. Buying a house will be more difficult if the buyer slows down on credit card payments, he said. The buyer of a house should also put aside enough cash to cover six months’ worth of expenses.
What type of home should you invest in?
Even though it is usually determined by the budget, selecting the best investment also depends on the requirement and location. Modi recommends an investment of Rs 2 to 3 crores, while Joshi of Bengaluru recommends buying land in a good location. A plotted development may be a viable option in Pune, he suggested, as it was in areas beyond Thane.