Tips and tricks to help home-buyers in the new financial year
The financial year end is just a month away. Real-estate developers are wrapping up their audits and working on the weekends to tally accounts. Buyers are gathering documents to file their income-tax returns, and they’re jotting down plans for a fresh year ahead. Some renters will renew their contracts, while others will go house-hunting for a better deal. Expect the chaos to last until March 31.
For those eyeing their first homes, or looking to pick up a second property as an investment, or looking to sell their apartments, the coming financial year seems like an interesting time. But experts say the months ahead can be a mixed bag if you aren’t paying attention. Here’s what to look out for.
An eye on the polls
This is a deciding year for real estate, particularly with the general elections in May, says Muddasir Zaidi, executive director at realty advisory Knight Frank. If you’re looking to buy a home immediately, he recommends waiting until after the poll results. “If a strong coalition government is elected, there could be several changes in property sale policies.” For example, if one party is for reducing prices by introducing policy changes, and the other party favours developers minting profits, they will arrive at a solution and that may or may not be helpful to buyers, he explains.
If the elections do cast a shadow on the realty sector, it will be for a limited time, mostly because there are fewer sales during the period. Developers typically prefer to sell unsold stock rather than launch new projects, says Anuj Puri, chairman of Anarock, a property consultancy firm. “It might be a good time for home buyers to do some hard bargaining,” he says.
Skyscrapers rise, will prices drop?
A big change, is the trend of developers willing to negotiate prices with buyers, says Pankaj Kapoor, managing director of Liases Foras, a real-estate research organisation. “As the prices of inventories are inflated, and most of them remain unsold, we are seeing sellers ready to reduce prices.” Moreover, there will be a slight decrease in the home prices anyway because of the liquidity crisis, he adds.
But if you’re looking to buy a home simply to get great returns on it in the short term, say the next three to four years, this might not be such a good time to splurge on a flat. “It is unlikely that there will be appreciation of prices in that time,” says Kapoor, explaining that it is a fallout of the prevailing liquidity crunch. “But if people are buying their first house or upgrading from a small house to a medium-sized one, now is the time to reap the benefits.”
The Non-Banking Finance Companies (NBFC) crisis also means developers are also offering various incentives to spur demand, says Abhinav Joshi, Head of Research, CBRE India, a realty consultancy. Most buyers today will look for a home loan. Experts advise taking a second look at home loan repayment rates across various banks. The Reserve Bank of India (RBI) has slashed the repo rates recently, which prompted a few banks to slash their home loan rates, says Puri. “Fearing delays, stalled projects and an added cost of stamp duty and taxes, homebuyers have also been preferring ready properties that are exempt from GST charges.”
And the reduction in GST prices will pave way for more buyers. Zaidi says the GST will be reduced from the current 12% to most likely 5% but will be confirmed after the GST council finalises it on February 24. This will relieve buyers up to some extent. “The move by the government with the election around the corner is aimed towards buyers as it clearly does not benefit the developers,” he adds.
Is cheaper always better?
With the affordable housing segment growing, buyers might seem like there is a bonanza for cheap homes. But Puri advises additional vigilance about selecting the right property in the right location and by a builder of good track record. In the last 2-3 years, the affordable-home concept was in its nascent stage. Now every builder wants a slice. The years 2019-2020 will see more builders coming up with affordable projects. “While cheaper options are available in far-flung areas, investors must opt for locations that have good connectivity to the city,” says Puri.
People should be aware of the schemes available in the affordable housing segment too, cautions Zaidi. “Developers, big and small are all entering the segment. There can be houses tagged ‘affordable’ due to their size and criteria, but won’t fetch any government incentive for the buyers. For instance, the Haryana state government clearly defines the size, price and area of an affordable housing that can help customers get some leeway in their home loans.”