- The best way to find yourself is to lose yourself in the service of others. Mahatma Gandhi
Own My Dream House
Not that my income has moved up sharply in the past two years, but for how long will I keep waiting on the side to invest in my dream home? I am prompted to buy my own property in the year 2016 and I have my reasons.
Price Correction In Property Markets
I have been reading a lot of news flow on how the property market in India was overpriced in the year 2014. In fact many “property gurus” are predicting a wide spread and deep correction in prices of real estate. I have done my own primary surveys and I feel the market is really “soft” and inventory isn’t moving. When I talk to real estate firms I don’t see the exuberance that once was found with the sales force in these companies. The other thing I find during my site visits and speaking to property brokers is that firms are ready to negotiate if you come across as a serious buyer. You want the most advanced fittings or accessories to be installed in your dream home, ask for it now. This isn’t any favour being done for you by the real estate firm it just decided to pass on discounts in form of benefits – free parking, stamp duty waiver, modular kitchen, free Preferred Location Charges (PLC) and many more.
Subvention Schemes Make The Proposal Lucrative
With apt disclaimers (i.e. Subvention schemes do carry risks), a subvention scheme makes a good case to buy into under construction properties of leading builders. Why so? The leading builders (ones who have delivery track records and less debt on their books) are simply trying the subvention way to package discount in terms of savings on your interest on Pre-EMIs. We did some rough numbers, in a project that is about 2-2.5 years from delivery one can save 15-20% of the cost of an apartment by way of interest savings in this period. Subvention schemes will stay as long as markets remain soft and are likely to be withdrawn by the property companies once market recovers. One reason why subvention schemes are popular is developer’s reluctance to drop “Sticker Price” of a project. So while he may quote the same “high” price, he passes the benefits without reducing the “Sticker Price” in form of saved interest to the buyer.
Investors and Builders Are In A Slugfest
I just checked up prices on a leading classified and found that rates of the same property in the primary market (sale by builder) vs those in secondary market (sale by investor) are differing by 10-20% depending on the city and the specific market. Basis the deal I can strike with either of the counter parties I can own the property at a better rate, thanks to the competition. Many brokers aren’t so amused by the way builders have been packaging benefits to lure buyers, when the same brokers are a big market to the companies during better times.
Government seems to be serious about infrastructure development
While we may have several reasons to dislike the current Union Government led by the BJP, there seems to be some silver lining when it comes to infrastructure projects. Better and newer roads or rail connectivity will help real estate growth in various cities. So I may just want to buy my house now and benefit if any through appreciation which might follow once infrastructure is in place. The following argument is based more on hope than facts, however this is just a personal belief provided 1 & 3 above hold true.
Raghuram Rajan Is My Santa Claus
An interest rate cut was on the anvil but on September 29, 2015 the RBI Governor brought the policy rates to levels seen 4.5 years ago. Now the banks and housing finance companies are likely to follow the suit and bring down the burden of EMIs on me. While the actual interest savings might just be to the extent of 2-2.5% depending on loan tenure and the product type, I am an Indian and I welcome any savings. Again, this measure will mean nothing if 1 & 3 above don’t hold true. While I am encouraged to buy my dream home in the financial year 2016, I am also sceptical about project deliveries. The data isn’t supportive of builders honouring their contracts with buyers, for eg. a study by leading consulting firm Propequity found delays of over 20-24 months in projects delivered in the years 2011-14.
So what should I do? Buy near delivery or ready project? I have to make it my home…..Right!