The limited period offer of lower home loan rates from public sector banks might help save a little over a thousand on your EMI, if you go for a home now. But if wait, chances are, you will save much more from a widely expected fall in real estate prices in coming months.
The consensus among property experts in New Delhi and Mumbai, contacted by Hindustan Times, is that flats in the Rs 35-60 lakh category — which is the most desired segment of houses for middle class families in these cities — could fall at least 10 per cent over the next six months. In the case of high-end apartment houses, the drop could be bigger, they said.
The benefit from reduction in property prices over the next few months are likely to outweigh the benefit of the lower interest rates being offered by PSU banks for a limited period ending on June 30 (see box on right).
A flat going for Rs 40 lakh now could cost Rs 4 lakh less in 6-9 months.
If you have Rs 20 lakh cash and borrow the rest from a PSU bank now, you would pay Rs 18,320* monthly installment for 20 years.
If you wait for 6 months, you would have borrow Rs 16 lakh and pay EMI of Rs 15,705**.
**EMI is calculated at 10.25%, assuming interest rates six months later won't be higher that the rate PSU banks charged a week ago.
By waiting, you could also gain from being able to pick houses in areas, where the rates are much in excess of you budget.
“We expect the rates to fall by approximately 20 percent by February-March next year and that would be the best time to buy,” Pawan Swamy at property consulting firm Jones Lang LaSalle Meghraj.
According to property portal Makaan.com, 61 per cent of 688 respondents in Delhi participating in a survey said they are willing to wait for up to 6 months.
And 35 per cent said they expect prices to fall further in the short term.
From the peak reached in January this year, prices are expected “to come off between 25 to 35 per cent in the high-end segment and probably 20 per cent in middle segment,” said Anshul Jain, India CEO of DTZ International Property Advisers.
However, prices are likely to hold somewhat steady is the Rs 20-25 lakh category, but at these rates there are hardly any apartment flats available in the developed neighbourhoods of any metropolis in the country.
For example, a buyer with a Rs 25-lakh budget in the National Capital Region would have to settle for a place in Crossings Republik, New Gurgaon or the poorly connected neighbourhoods of Faridabad. In Mumbai, builders are coming up with affordable house, but in faraway places like Virar and Vasai.
In Bangalore, the buyer would be pushed as far as Yelahanka, 25 kilometers off the main city, while in Kolkata it would have to be in townships in the outskirts — Rajarhat and Patuli.
(Naresh Kamath in Mumbai contributed to this story)