Right time to buy property

Q: I will say yes, with builders sitting on huge inventories, buyers can bargain hard for discounts.

Manisbapu, Mumbai

24th August 2015

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Replies (3)

The biggest issue faced by buyers is the disability of builders to deliver on time. This problem is specially critical in Delhi-NCR and MMR. In NCR, only 20% projects are running on time. The figure for MMR is 15%. People who invested with an aim of exiting with good gains in three four years are stuck. People have realised that in a bad situation getting out of real estate can be very difficult.

Himangi deshmukh, Delhi-NCR

24th August 2015

Comment

It is true Himangi,
High interest cost is the another reason for poor sales. Buyers are waiting for a cut in home loan rates. However, if this was the reason, one would have seen a decline in demand for home loans. But according to Reserve Bank of India data, gross bank credit to the housing sector rose 17.4 % in the one year to 20% in February 2015. Bank home loan have been growing steadily at 18-20% CAGR over the past few years.

Anuj Gupta, Mumbai

24th August 2015

Apart from the above mentioned reason, lack of transparency could be the another reason. In spite of the fact that buying a house takes up a big part of people's earnings but being the most unregulated sectors in India, this has made it easy for the builders to break rules.

Nevertheless, the government is making efforts to bring in more transparency and accountability in the sector.

Himangi deshmukh, Delhi-NCR

24th August 2015

Yes, now, one has to provide permanent account number for any purchase or sale of Rs 1 lakh and above. In 2013, it was made mandatory for anyone buying an immovable property (other than agricultural land) exceeding Rs 50 lakh in value to deduct 1% TDS before paying the seller. The tax can go up to 20%, if the seller does not disclose his PAN. This also applies to purchases financed by banks and housing finance companies.

Anuj Gupta, Mumbai

24th August 2015

Hello Himangi,
This rise in demand between 2009 and 2013 saw prices double in some markets. For example, Noida Extension was the one of the key markets in the National Capital Region where prices almost doubled from Rs 1830/sq.ft. to Rs 3476/sq.ft. between March 2010 and March 2013.

Deep Thakur, Delhi-NCR

24th August 2015

Comment

Even the prices in Panvel, Mumbai, rose from Rs 2904/sq.ft. to Rs 4898/sq.ft. Similarly, prices in Whitefield, Bengaluru, went up from Rs 2400/sq.ft. to Rs 4134/sq.ft. during the period. But things have worsened after 2013. Since then, prices have declined. The asset class turned out to be 2nd worst performer in 2014/15, when equities returned 25%.

Ramdas Palsule, Pune

24th August 2015

Builders were expecting that a new government at the Centre and falling interest rates will help stimulate demand, but nothing of that sort has happened yet.

Deep Thakur, Delhi-NCR

24th August 2015

Right Manis,
As the real estate sales are falling, this is the right time for the investors as well as for the end users to enter into the markets. There has been a 50% rise in unsold housing inventory between June 2012 and December 2014. The top 6 markets are Bangalore, Chennai, Hyderabad, Mumbai Metropolitan Region, Delhi-NCR and Pune have nearly 7 lakh unsold units.

Ramdas Palsule, Pune

24th August 2015

Comment

Yes, the realty trend has surprised many observers. It has always been the most sought after asset class, given the kind of returns it has delivered in the past. Even after the financial crisis of 2008, some residential markets saw fast growth. And, when equities bit the dust after 2008, people further increased their dependence on real estate and gold.

Himangi deshmukh, Delhi-NCR

24th August 2015