Know When to Invest in property !
Whether you are baking a cake or cracking a joke, the outcome of your efforts greatly depends on the timing. This is especially true when it comes to property investments. A smartly planned and well timed investment could earn you a fortune, whereas an ill timed decision can clean you out.
But how does one know when the time is right? If you are a first time property buyer or even a veteran real estate investor, the below mentioned pointers may help you determine the right time and circumstances to take the property plunge.
Preparation: Be prepared to grab the opportunity when it presents itself. Aligning your resources, filing your tax returns and accounting for unexpected situations will ensure that nothing stands in your way.
Economic Conditions: The real estate market is governed by the unpredictable forces of demand and supply. The rule of thumb here is to buy when the market is low and sell when the prices are on the up. Watch out for signs like rapid sales, aggressive advertising by realtors and fluctuations of interest rates, but also remember to follow your instincts.
Housing Supply: The supply or stock of property developments has a profound influence on the aggregate real estate prices. While the increase in supply of new developments causes the prices to fall (favoring the buyer), the dearth of new housing generates a voracious demand for property, allowing sellers to fetch a better price.
According to reports, India is expected have a total demand of 2.3 million units of houses in the next five year, whereas the amount of supply in the same year is expected to be approximately 1 million units. This means there will be a deficit of over 1.3 million units.
Interest Rate: Interest rates have a direct impact on the availability of capital. While soaring interest rates may discourage new buyers from borrowing money, it also has a reverse effect. A rise in interest rates arrests property demand, which in turn forces property prices to drop.
India, has witnessed at least 12 hikes in interest rates by the Reserve bank of India over the last 18 months, burdening home loan borrowers with steep EMIs.
Housing Style & Trends: Markets teeming with cookie cutter houses give buyers an upper hand during negotiations. However, such trends may tend to go out of fashion in the future, thereby adversely impacting the property value. Conversely, a unique house in an already developed neighborhood will always ensure good returns, but may cost you an arm and a leg.
Experts are anticipating slow but continuous supply of premium products along with Ultra affordable housing for all.
Social Factors: Properties that are in close proximity to schools, hospitals, shops and other facilities will stand in good stead at all times.
Population & Migration: Though a burgeoning world population will not really affect your immediate purchase plans, it does play a vital role in the real estate market. With higher birth rates, lower mortality rates and heavy migration, expect a space crunch in the future.
Invest in the Future: Often, the price of homes in well established localities are way out of budget. This is when you should divert your focus into investing in the future. If you spot a region that is in the stages of development, then it may be a good time to invest in it while the prices are still low.
All mid end and affordable housing segments are expected to record strong appreciation in capital values starting from the fourth quarter of 2011 up to first half of 2012.
Industry Insiders: Extract as much information and get solid advice from real estate agents, investment advisors, reputed builders and other professionals before making a purchase.
Patience: Your real asset when it comes to making sound property purchases is your patience. There are times when you will get tempted or frustrated but your success depends on how well you play the waiting game.
