High EMI hurt salaried investor’s sentiments
Increase in repo rate by RBI has ruined the prospects of different segments of people in the nation, high-salaried investors being the primary one. With the advent of RBI’s new policy, high-salaried property investors, who have previously reaped the benefits of greater returns, are now left with limited scope and saturated output.
In addition to it, slackening of the economy, low wage revisions and increasing cost of living coupled with elevated interest rates have compelled salaried professionals, who had previously invested in real estate, to put up their properties for sale.
In regard to the present market scenario, investors who have put their money in real estate some 10-15 years ago, now find it to be a backbreaker to service their home loans. To make matter more worse, with the increasing interest rates and rental yields heading for a fall, servicing home loans has become a pretty expensive venture.
Resale factor
According to some property consultants, the resale inventory in the country has piled up to 30% in the past two quarters. One of the prime reasons for such a slump are increased EMIs, courtesy of the RBI’s new policy. This in addition to economic slowdown has compelled the real estate industry of the nation to take a dip. Properties that have been purchased before by salaried professionals are now set for resale, since the EMI is beyond reason.
The resale market in the country is mainly driven by young professionals and huge cash inflows which the sector receives. In the present economic scenario, getting a tenant for higher returns is as difficult as finding needle in a haystack. It is a challenging task since, people play it safe before taking the plunge because of uncertain economic conditions and opt for properties with lower rents.
Why resale properties is preferred?
Primary buyers, who play a key role in the annual sales volume of developers in the realty market, find it convenient to invest in resale properties instead of new homes, due to less risk involved.
The resale inventory is typically concentrated in big metro cities. Potential home buyers are always in search of such opportunities since it offers an option to investors to get close to possession prices and need not to be concerned of the risks included in new projects. Sellers, on the other hand are left with higher returns instead of settling down for poor rental yields.
