Guest Column
A Time to Buy


The bright signs are there of the economy’s revival. It is time for the home buyer to moderate expectations now as single-digit home loan rates are not coming back nor are property prices going to crash. Even a smaller home now can contribute substantially to a bigger one later whereas procrastination may not pay
There is some cause to cheer for homebuyers at last. First is the increase in the tax deduction limit on interest on home loans from Rs1.5 lakh to Rs2 lakh and for principal amount from Rs1 lakh to Rs1.5 lakh. Second, the move by the Reserve Bank of India (RBI) to bring housing loans of up to Rs50 lakh under priority sector lending from up to Rs25 lakh. Third, home loan rates are expected to fall for new borrowers because the RBI has allowed banks to raise long-term funds through bonds for lending to affordable housing and infrastructure sectors.
Home loans up to Rs50 lakh for houses priced up to Rs65 lakh located in six metros of Bengaluru, Chennai, Hyderabad, Kolkata, Mumbai and New Delhi and, Rs40 lakh for houses costing up to Rs50 lakh in other cities carry the affordable housing tag. Banks can raise long-term soft funds from the market to finance such loans. But builders are not eligible for the loans. The infrastructure tag for affordable housing will give a leg-up to the housing sector. It will lead to property prices falling in the long term as developers will be able to get cheaper funds for the development of affordable housing. Banks and non-banking financial companies (NBFCs) have started laying the ground to ensure home loan borrowers rush to them and not their opponents when achche din actually set in for the real estate sector. The State Bank of India and HDFC Bank recently reduced their home loan rates for new borrowers, other banks are expected to follow suit.
With the festival season around the corner, this is likely to provide a boost to the realty sector. The National Housing Bank (NHB) is mulling over a proposal to raise the loan-to-value ratio for home loans to 90 percent of the property value from 80 percent at present for home loans exceeding Rs20 lakh.
•Home loan rates are expected to fall for new borrowers because the RBI has allowed banks to raise long-term funds through bonds for lending to affordable housing and infrastructure sectors.
•The infrastructure tag for affordable housing will give a leg-up to the housing sector. It will lead to property prices falling in the long term as developers will be able to get cheaper funds for the development of affordable housing
All these measures reflect a change in mood. The positivity that pervades the air after the change in regime in New Delhi is expected to percolate to the property market.
According to the National Housing Bank, urban India is facing a shortage of nearly 19 million houses. To add to the woes, people belonging to the middle-income group cannot afford to buy houses available in the market. In fact, according to a study, a house in a non-metro city costs more than five years of annual income.
As the rush for application forms for flats to be constructed by the Delhi Development Authority (DDA) shows, there is immense latent demand for houses. Consumers have been keeping away mainly because of two reasons. First is their distrust of private developers. The various rulings by the Supreme Court have confirmed their fears. Second is the cost of apartments on sale and the high home loan rates.
The property market is stuck in a vicious circle where the buyers are waiting for the property and loan rates to come down and, the sellers are waiting for the buyers to blink.
Both sides need to accept the middle path. The real estate sector cannot be adamant that it will dictate the prices and buyers be damned. The buyers on the other hand must accept the ground reality and moderate their expectations.
Mid-single-digit home loan rates are not coming back any time soon. The increase in the cost of construction materials and labour wages mean property prices are also not going to crash as often predicted by doomsayers.
With economic growth showing signs of recovery in the first quarter of the current fiscal year, one can expect that the worst is over and things will only get better from here on.
Owning a house is a dream everyone nurtures. The buyers must cut the coat according to the cloth and purchase a house that is within their budget instead
•The positivity that pervades the air after the change in regime in New Delhi is expected to percolate to the property market.
• According to a study, a house in a non-metro city costs more than five years’ annual income.
• The consumers have been keeping away mainly because of two reasons. First is their distrust of private developers. The various rulings by the Supreme Court have confirmed their fears. Second is the cost of apartments on sale and the high home loan rates
• The property market is stuck in a vicious circle where the buyers are waiting for the property and loan rates to come down and, the sellers are waiting for the buyers to blink.
•Mid single-digit home loan rates are not coming back any time soon. The increase in the cost of construction materials and labour wages mean property prices are also not going to crash as often predicted by doomsayers their dream home. The house is an asset you are creating.
Remember as the growth engine revs up and your city becomes a hotspot for IT, ITeS, BPOs, SEZs, industrial parks or FDI, property prices are bound to go up. You can always sell your smaller house to finance a bigger one but sitting tight may prove to be the wrong decision in the long run
-
News2 days ago
Commercial Office Market at Record High, Signals Major Transformation: FICCI-Colliers report
-
Guest Column20 hours ago
Year of Transformation: How India’s Real Estate Sector is Expected to Grow in 2025
-
News19 hours ago
SG Holdings Acquires Shares in Morrison Express to Expand Supply Chain, Logistics Services
-
News19 hours ago
Colliers India Seals Deal for 68,021 Square Feet for Protean eGov Technologies in Mumbai
-
News19 hours ago
2,600 Participate as CRC Group Organizes 9th Edition of the Noida Grand Marathon
-
News13 hours ago
Spectrum@Metro to Host Daawat-e-Ishq to Mark Saint Valentine’s Day
-
News18 hours ago
QIP Fundraising at Record High in 2024, Real Estate Leads with ₹22,320 Cr
-
News18 hours ago
Google India Renews Office Lease at ₹3.55 Cr PM, Google Cloud India at ₹1.24 Cr PM in Mumbai’s BKC