With sales drying up, developers are attempting to lure homebuyers through the lucrative 20:80 home loan scheme, by constructing 1BHK apartments and waiving additional expenses such as stamp duty charges.
The 20:80 home loan scheme, in particular, is an option several people are opting for. It involves the buyer having to just pay just 20% of the total amount up front, and put in the remaining 80% after getting possession.
The builders pay the EMI in the interim.
“Sales are reasonably good because of the scheme. The biggest advantage is that it puts pressure on the builder to complete the project in time or he pays for delays,” said Ashok Mohnani, chairman and managing director, Ekta World, which introduced the scheme for its Ekta Tripolis project at Goregaon.
Sukhraj Nahar, director, Nahar Group, which used the same strategy for Nahar Amrit Shakti, said. “I am now bound to complete my project within three years.”
However, Pankaj Kapoor, managing director, Liases Foras, expressed some apprehensions.
“Most apartments cost more than a crore. How many buyers have a minimum of Rs20 lakh to pay upfront? There is also no clarity on what happens if builders default, as the loan is taken in the name of the consumer.”
It isn’t only easier payment options that builders are trying. After virtually abandoning the idea of 1BHK flats, many developers have realised that there is a market for smaller homes.
“At present, 1BHK flats sell instantly,” said Tejas Vyas, director, Oyster Group, which is coming up with 50 such units at Kandivli. Each unit is priced at a minimum of Rs60 lakh. “Not everyone has too much money, so they prefer to buy smaller units,” said Nahar, who is coming up with 200 such houses in Chandivli.
And if none of these measures work, builders pin their hopes on waiver schemes such as free stamp duty registration, no floor rise charges, free parking and club memberships.
But real estate experts say though these are all welcome moves, the root of the problem has not changed. “The pricing remains the main issue and builders need to bring them down for sales to take place again,” said real estate consultant Sunil Bajaj.
With sector in turmoil and polls coming up, could prices fall soon?
With low sales, liquidity crises and the general elections coming up, builders say there may soon come a time when they have no choice but to slash real estate prices.
“No sales are taking place at present, and we are seeing no signs of recovery,” said Paras Gundecha, former president, Maharashtra Chambers of Housing Industry (MCHI). “We may see some reduction in prices in the coming days.”
The Builders Association of India (BAI) said that a subtle decline is already visible.
“You can get a good deal by bargaining in this market,” said Anand Gupta, secretary, BAI. “There is a difference between the quoted price and what you can get by negotiating.”
Prices peaked in the past two years, at what most would call unrealistic levels. For instance, property rates in Malad are now quoted at Rs10,500 per sq foot from Rs5,500 per sq ft two years ago.
In Mulund, buying a house will cost you Rs11,000 per sq foot when two years ago, it was just Rs6,000 per sq ft. The situation in the island city has been no different, with Mahalaxmi’s 16,000 per sq ft spiking to Rs32,000 per sq ft.
Optimistic that the murmurs of rates falling will one day turn to reality, homebuyers are also playing the waiting game. Mitesh Gala, a tutor who earns Rs50,000 a month, said “The present rates are completely unrealistic and I have stopped scouting for houses. I will wait for prices to fall.”
Gundecha said the reduction can be facilitated easily if authorities are serious about doing so. “If we get access to funds more easily, we do not have to depend on private lenders who charge exorbitant interest rates. We can then pass this benefit on to the buyers,” he said.
Real estate consultant Ajay Chaturvedi said the prices could come down in the next six months.
“The foreign investments have dried up and now with the 2014 elections coming up, most politicians who have invested their money are withdrawing it.”