Rising prices and the impending Lok Sabha elections appear to have put the brakes on property sales in the State though builders have admitted to substantial number of enquiries coming in as the financial year comes to an end.
Sales had picked up in December, January, and February but have suddenly slowed down after the announcement of the elections. This could be on account of investors waiting to see what happens after the polls, feels V. Sunil Kumar of Asset Homes.
However, K. Lava, managing director of SFS Homes, feels that the price has a lot to do with the deceleration in sales. “It is not that there is no demand. There are people ready to buy homes but affordability is a major factor,” he says.
Prices have been shooting for various reasons, including the tax and labour factors. Over the past two years, labour costs have gone up 30 to 40 per cent and taxes form about 30 per cent of the actual cost of a property.
Mr. Lava says the government could relent to help the first-time home-buyers by providing some concessions on the tax front. “May be the government can even put a limit on the area, like say a 1,000 sq ft, for providing tax concessions. This will definitely be able to ease the burden on first-time home-buyers,” he says.
He also speaks of the property market in Kochi acquiring character like in other cities, where location plays a key role in the sale of a property. In cities such as Bangalore, where road infrastructure is good, property development has been well spread out. Mr. Sunil Kumar says that the overall market is not too bad though the general deceleration in the economy has widely been reflected even in the real property market.
He says that there are some expectations that investors will convert their enquiries into buys considering that prices are set to go up in the new financial year. At least a 10 per cent-rise is an imperative considering the fact that construction input costs will go up with new taxes being put on products from granite quarries, including boulders and manufactured sand.
Those using the Central Sales Tax facility will also be paying three per cent more tax in the New Year, closing the window on what used to be cheaper purchases for the builder in the past.
One of the more immediate effects of the announcement of the elections next month is that a lot of labourers have gone back home for voting. This means a labour shortage for at least a month, Mr. Lava says.
