Riding on expectations of a stable national polity after the Parliamentary polls, the next six months to one year would perhaps be a good time to buy a home which, as things stand now, is still the best wealth-creating instrument available to a middle-class salaried family.
Real estate market ‘observers’ in east India feel that despite the soaring realty prices, the bubble will burst with the strong possibility of greater stability in oil prices and the national political scenario. They are confident that after the Lok Sabha elections in April-May most of the banks are likely to reduce their home loan rates of interest to a comfortable level to attract more investors especially the young entrepreneurs.
“It is therefore, advised that anybody taking home loans should opt for variable rates of interest rather than the fixed rates of interest as interest rates are most likely to come down in the times to come,” said Reena Malik, director of Malik Infrastructures (I) Pvt Ltd.
Malik, whose business interests are spread across Port Blair and West Bengal, said: “The overall situation of the realty market is not as grave as is projected. Even if someone considers the present rates of interest on home loans, it is still not scary because of the tax breaks he or she enjoys on home loan EMIs.”
Concurring with Malik, Pradip Kumar Chopra, chairman of PS Group, said: “After factoring the tax break (of 35 per cent that one enjoys on home loans), the effective rate of interest on home loans works out to be less than 9 per cent which is very competitive if one considers the inflation rates at 11.5 per cent and the average rise in property prices annually being in the range of 15-20 per cent if one takes into account the rise of prices of properties and apartments in India during the last 25 years.”
Added Chopra: “Just by converting the rental payment (which is being provided in everymonthly budget) into an equated monthly installment (EMI) payment against home loan, any middle income salaried class family can create a wealth in the form of a home of tremendous market value at the end of the home loan payment tenure — let’s say within 20 years — by opting for a home loan and buying one’s desired home. One can ensure to stay in one’s dream home on the payment of a fixed rate of EMI instead of ever increasing rentals which are likely to increase at least at the prevalent rate of inflation in the times to come and which may be subjected to service tax too at some future date.”
While appealing the buyers, Ajit Pal Singh, founder of Supravina Constructions, said: “I admit that the recent economic slowdown and recession has created panic among buyers. But I would like to take this in a different way. Today homes not only provide a roof over one’s head but also complete financial security.”
On the context of those who want to invest in houses rather than apartments, he said: “The municipal tax in self-occupied or newly-built homes are much less than a rented home. Therefore, buying one’s own home or a bungalow by taking a home loan is the best wealth creating instrument available to a middle class salaried family.” He feels that this is the golden chance available to the home buyers.
CREDAI feels that the present realty market in eastern India came after few years of hectic rise in property prices due to investment in property by speculators and investors. Presently, both the investors and speculators in properties are out of the market and a genuine buyer therefore, can get the best value for money deals. “In our opinion therefore, the next six months to one year would offer the best opportunities for actual buyers of homes to buy their dream apartment,” said Bimal Rathi, founder of Ayush’s Constructions.
In the 1960s, property prices in Mumbai were almost at par with that of Kolkata. In 1970s, the property prices in Delhi were less than that of Kolkata. In 1980s, the property prices in Bengaluru, Hyderabad were much below than that of Kolkata. Until about a year back, the property prices in Chennai and Pune were much behind than that of Kolkata. However, the property and apartment prices presently in all these cities have crossed the highest prices of apartment in Kolkata.
Presently both the investors and speculators in properties are out of the market and a genuine buyer therefore, can get the best value for money deals
Kolkata, as of today, offers much better value for money homes than any of the metropolitan cities and cities mentioned above offering similar or lesser job or business opportunities and quality of urban infrastructures.
Recently, because of the increase in the rates of home loans, the soaring prices of apartments and properties across the country are being checked. Today a buyer can get much better value for money homes in terms of location, specifications, terms of payment, facilities and amenities in any of the upcoming housing complex than what was available six months back.
Asked to elaborate on buyers’ friendly schemes, Rathi said: “Now most of the city and suburbs developers are asking for only 15 to 20 per cent of the total property price and the rest after taking possession. If someone is staying in a rented apartment then such schemes are a boon for them as they don’t have to take the burden of EMIs as well as the monthly rent. Many of us are also offering attractive payment schemes for women and government employees. So there is no need to be wary of investing in property and with the coming Lok Sabha elections, property prices are likely to be even friendlier then before.”
This is despite the fact that the cost of construction has gone up due to overall inflation and particularly because of increase in the prices of steel, cement and all other construction materials. Moreover the prices of all these inputs are likely to continue increasing during the next six months.
However, the next six months may see many more projects and apartments being offered to buyers of homes at much more attractive prices, terms of payments and facilities. “In my opinion, therefore, the next six months would be best time to purchase an apartment anywhere in the country in any of the upcoming housing complexes,” Malik said