The real estate market is in stasis. Buyers are few and far between. Prices are hovering around where they were. Developers aren’t exactly flushed with funds. Something has to give. If buyers don’t flock to buy homes in the festive season, prices will likely come off. And the cuts can be quite sharp.
The big dilemma for home buyers is whether to hope for gains from realty sector pain ahead or to make the most of the festive deals on offer. The answer is not as clear as chalk and cheese. Some developers are taking the lead in offering discounts and waivers of certain charges—like preferential location charges and club membership fee. Banks and home finance companies are also looking to drive home loan disbursals through festive rate concessions.
Of the two, the more critical component is the concession from the developer. The festive rates being offered by home financiers are just about 15-20 basis points lower than the earlier rates. These are not incentive enough to drive your home purchase decision. To give you a sense, on a 20-year home loan of Rs.75,00,000 at an interest rate of 10.4 per cent, the EMI is Rs.74,375. If the festive rate is 10.25 per cent, your EMI will go down to Rs.73,623. This spells a reduction of Rs.752 per month.
What you can squeeze out from the developer is what you should base your decision on. Costs like preferred location charges (PLC), club membership and parking charges can add up to a tidy sum. Besides, some reduction in per square foot rates should be offered by the developer in light of the uncertain environment. Remember, we are in a buyer’s market today. So drive a hard bargain. You have little to lose. In fact, if you don’t, you might repent later. The economy isn’t picking up in a hurry and realty prices aren’t going up anytime in the near future. A downward drift, however, is a distinct possibility. Make sure you get a good bargain. Keeping the acquisition cost reasonable and the EMI very affordable in an uncertain environment should be your prime consideration. Bear in mind that under construction projects will most likely miss their completion dates by a wide margin if stress in the sector persists. Be ready to wait longer for your investment to bear fruit.
