Buying a home is a huge investment and a long-term financial commitment. In addition, skyrocketing property prices and high home loan interest rates compel buyers to put a pin on their wish to buy a house. Several factors come into play while buying a house, such as market trends, home loan rates, the genuineness of the property for sale, including future prospects of price slash and the like. Well, it cannot be denied that real estate sector has undergone a slowdown for past few quarters, but experts opine that going forward the sector may regain its losses. So, does it mean it is the right time to invest in a house?
Demonetisation, affordable homes, and tax rebates are being considered as some of the major factors that will recover the real estate sector with dual benefits i.e. for the realtors as well as the buyers. Let’s consider each of the factors to help you decide whether or not to invest on a house now:
I. Demonetisation – Post demonetisation there has been an enormous inflow of funds back into the economy thereby improving cash circulation in the formal banking system. The increased liquidity will lead most banks to cut home loan interest rates – a benefit that most borrowers would like to seek.
II. Affordable homes – Budget 2017 brought good news to the real estate sector by endorsing it to the category of infrastructure. This will address the need for affordable housing – a segment that witnesses maximum housing demand. This initiative will also make builders and developers eligible for several Government incentives, subsidies, tax benefits and institutional funding.This will further boost builders to include tier 2 and tier 3 cities under their radar of construction.
III. Income tax rebate – The Budget 2017 brought some relief in the form of tax rebate for individuals earning up to Rs. 5 lakh. Alongside, the curb in cash transactions of above Rs. 3-lakh, could also bring in the stabilization of prices in the secondary real estate market. These developments are definitely beneficial when it comes to buying houses.
IV. Demand for ready-to-move-in houses – Real estate developers across the country had been through the slowdown phase leading to a considerable number of unsold inventory. However, experts opine that 2017 will see an upsurge in demand for ready-to-move-in residential properties. This is so because home loan rates are set to fall and also the probability of fewer new launches. In addition, there are several benefits of ready to move-in properties. The buyer gets a fixed base price thereby negating any kind of price uncertainty in the future; no delays in project delivery as it is ready for immediate possession; the benefit of physical inspection of the property for conformity to building rules, quality of construction and actual space on offer, unlike in under-construction properties. These factors increase the credibility of a purchase and are a big advantage for the buyer.
V. Policy impact – The year 2017 is set to embrace few policy changes in terms of stamp duty, Goods and Service Tax (GST), and Real Estate Regulation Act (RERA). The GST rate has a significant impact on the real estate sector as it becomes one of the deciding factors for the cost of construction. Higher GST rates result in higher cost of construction and high property prices, similarly, lower GST rate will keep the property price under control allowing more buyers to own a home. With RERA coming into force, it will increase transparency and put an end to the trust deficit among buyers. With an improved focus on uniformed taxation policy, the credibility of this sector is set to rise.
In conclusion, with all the developments taking place in the real estate sector, it may just be the right time to assess your options to buy a house.