Resale market opted by home buyers; project delays trigger boom
The resale real estate market in India has gained a lot of importance and most of the home buyers are opting for it in spite of the dipping sales of new projects in the past few years. The resale market is fetching quite a lot of business and most of the banks and financial companies are witnessing a drastic change as maximum number of investors are distancing themselves away from delayed projects.
Around 30% of home buyers have opted for ready or nearly ready homes rather than an under construction or a delayed project.
What is the reason for the investors to opt for a resale/ready-made property?
With more and more number of projects coming up in all cities in India, there is an increased demand for various housing sectors. Apparently, due to reasons such as enormous delays in execution, liquidity crisis, high cost of borrowings and growing rentals, many investors are opting for readymade properties.
Most of the home buyers fret about the project delays and prefer to have a project at a much later or almost in the completed stage and are also ready to shell out a premium amount. There are various projects which are delayed by about more than 18 months. The buyers are worried about the indefinite waiting and uncertainty about the possession. This ultimately results in people opting for resale projects or readymade projects. Buyers are more careful these days before buying a home.
How is this beneficial to the real estate industry?
This choice of the buyers will do well to the real estate industry as they can pressurise the builders to deliver their projects on time. The developers should look at this preference as a caution signal. The sale of new homes had dropped by the quarter of this year and the business moved on to the secondary market wherein people are ready to invest huge sum of amount for readymade projects. More and more number of people are opting to invest in a home due to the high rental and property prices in all the states. Cities such as Mumbai and NCR regions have an increased amount of rent of about 10%-30% based on their location and other aspects. In order to save on rent, most of the homebuyers are opting to invest in property.
Buying an under-construction property today involves an additional amount of 5%, because of the inclusion of VAT and service tax. This apparently makes the properties expensive. On the other hand, ready-made properties do not involve any such costs. Also most of the buyers who had staked on properties earlier are now stuck in the under construction and delayed properties which has alerted other property buyers.
