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Is 2019 The Best Time to Buy a House?

March 15, 2019 by balajisymphony  

Property in Navi Mumbai

The Indian real estate sector has witnessed several positive developments over the past few years, with schemes like the Pradhan Mantri Awas Yojana (PMAY), the granting of infrastructure status to affordable housing, 100 per cent tax exemption on the profits for developers building affordable homes, implementation of the Real Estate (Regulation and Development) Act, 2016 (RERA) and the subsidy schemes for first-time buyers of residential properties. The push towards infrastructure development also makes it an ideal time to invest in real estate, as the prices in a locality often increase, after the completion of an infrastructure project in its vicinity.

Mumbai’s recent development plan, for example, will enhance the infrastructure in the city, points out Amit Ruparel, managing director, Ruparel Realty. “The increasing number of metro lines, are closing the gap between distant places. The construction of more highways and other infrastructural development, will facilitate real estate industry, as well. Owing to the prolonged sluggishness in the industry, property prices have gone down significantly. Hence, home buyers should certainly take advantage of the situation,” Ruparel says.

Affordable and mid-segment housing in 2019

In the past few years, many developers have launched affordable and mid-segment housing projects. Industry experts are of the view that this is where the demand exists. According to Pritam Chivukula, co-founder and director, Tridhaatu Realty & Infra Pvt Ltd, “There has been a resurgence in Mumbai’s residential property market, with increased sales happening mainly in the affordable and mid- segment of the market, towards the second half of 2018. This provides a roadmap for 2019, which will see better conversion rates and creation of more housing stock, catering to these buyers.”

Aditya Kedia, managing director of Transcon Developers, adds that the government’s decision to grant infrastructure status to ‘affordable housing’ and the lower Goods and Services Tax (GST) rate on this segment, have brought relief to buyers and increased housing demand. “Easily available financing options, are further streamlining the property purchase of buyers and this is expected to result in an overall growth in real estate, in 2019,” says Kedia. Nevertheless, a majority of home buyers are likely to focus on ready-to-move-in apartments, where the GST is not applicable.

Reduced GST rates from April 1, 2019

Farshid Cooper; Managing Director at Spenta Corporation, explains “The 33rd GST council meeting was positive for homebuyers and in turn for developers. The issues regarding transaction costs and affordability which have plagued the sector over the last 18 months or so has been addressed. With the reduction in the rates of under construction buildings to 5% from the earlier 12%, the developer fraternity will be relieved as this could potentially be the catalyst to boost demand for under construction homes. Further, the reduction in rates from 8% to 1% for the affordable housing sector, will help the sector grow and go a long way in achieving the honorary prime minister’s vision of housing for all by 2022. Also, doing away the ITC (Input Tax Credit) will make GST compliance easier and more cost-effective for developers. That said, without ITC developers will now have to deal with increased cost of 18% (which is the GST rate for most construction-related items) and account for the same when planning cash flows and project costs.”

Second home segment to witness a revival

With modern day home buyers increasingly exposed to global norms through their travels, there is an increasing segment of buyers that is looking for uniquely designed homes in tourist destinations. According to Dhruthi Reddy Kasu, director, Kasu Assets, “People appreciate and value homes that are unique in design, as it enables the home buyers to have a fresh experience. This has a direct impact on the second homes market, where more people want the opportunity to have a getaway with family and friends, away from their otherwise urban lives.” Punit Agarwal, CEO of Nirvana Realty, says that the second homes market remained pretty much stagnant over the past few years.

“There was muted response from buyers, although many projects were completed on time. It was only during Dussehra 2018 that the sector seemed to gain any ground, as buyers once again saw the opportunity to earn returns from the second homes segment. This segment will, hopefully, see better days after the Lok Sabha polls,” he reasons.

HNI investment in Indian realty and returns on investment

Ramesh Sanghvi, CMD of Sanghvi Parrsssva, foresees a lot of investment in Indian real estate, from non-resident Indians (NRIs) and foreign investors, in 2019. “This is the right time to take a ‘buy’ decision, as buyers can secure discounts and deals across all the segments, as developers are struggling with excess inventory. Moreover, interest rates on home loans are likely to increase, forcing investors and end-users to take a call immediately,” he elaborates.

With developers holding back on launching new projects, the demand-supply gap is likely to increase, thereby, giving good returns on investment. Niranjan Hiranandani, co-founder and managing director of the Hiranandani Group, points out that for investors, real estate is about appreciation in capital values or rental income, while for others, it is an option for wealth creation. “Given the prevailing price points, the first half of 2019 would be an apt time to buy a home. This is a factor which should be taken advantage of, by the home seekers,” he maintains. Developers have also become more aware of what the buyers are looking for. Dhaval Shah, joint managing director of the Parinee Group, concludes that offers like fully furnished homes, easy subvention schemes and relatively easy availability of home loans, are some of the reasons why one should not wait to make a real estate investment in 2019.

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Source:https://housing.com/news/2019-best-time-buy-house/