Aloysius Xavier Lopez
CHENNAI: Chennai has always been considered as a good resale market for residential properties. Good value for money, ready-to-occupy status and locational advantage have always attracted buyers to second-hand flats.
This trend has been on the rise in recent times. This trend has also brought to attention the various issues that come with/involved in buying them. A few weeks ago a resale apartment fair was held by HDFC Ltd.
“The response to this resale initiative was very good,” said Mathew Joseph, Senior General Manager of HDFC.
More than a thousand properties were on resale and the realtors associated with them are busy closing the deals, he added.
In the present market conditions, many buyers do not want to wait for a period of construction of the house. So HDFC brought together the realtors concerned and facilitated the resale by providing loan facilities.
R.Subramanian, Business Manager, T.S.M. Enterprises, a property consulting company said the most of the buyers wanted property in the city limits in the price range of Rs.50-70 lakh. But many properties available for resale in the city limits are in the range of Rs.1.25 to Rs.2 crore.
The market slowdown has made the task of finding clients for new and upcoming apartments more difficult for many banks. Tapping the potential of resale of property has become a necessity for the banks and buyers may be able to gain from the development, say property consultants.
“The merits of buying a house on resale include lesser price and location within city limits,” said M.K.Sundaram, Chairman of Builders Association of India (South Centre).
The demerits of buying such houses are possible deviation from the approved plan, internal problems among the members of the residents’ association, including legal proceedings and absence of opportunity for the buyer to assess the process of construction, he added.
Technical valuation of a property on resale normally calculates depreciation of 1.5 per cent per year. Around 75 per cent of properties on resale now are ‘delinquency flats,’ according to a technical valuation expert.
The registration charge is also higher for resale apartments as it is decided on the guideline value of the total property.
In a new apartment, the charge is arrived at only based on the undivided share of land.
However there were no delinquency flats among the property on resale through the recent initiative of HDFC, according to Mr. Joseph. Brokers continue to say that the market is favouring the buyers.
As market prices of new flats are gradually reducing, according to technical valuation experts, price of resale flats should also follow suit soon.
Buyers are analysing aspects such as location, quality of construction and track record of the builder in the process of resale, say property consultants.
They say that the majority of buyers showing interest in properties on resale are end-users.
Investors are not opting for purchase of properties on resale.
Many properties on resale belong to speculators who invested in the property a few years ago and planned to sell the property at a higher price soon after the construction got over. They wanted to sell the property as quickly as possible fearing a reduction in the prices. With rentals not increasing to match the EMI, speculators are finding it difficult to maintain the property, he added.
The buyers are not showing interest in properties on resale in outlying areas of OMR and GST Road, said Mr.Subramanian.