The fact that most developers are in a spot of bother is starting to show in ways that are far more apparent. Many are extending offers at rates, that a few years ago may have seemed like the online big billion sales.
I often get SMSes promoting properties of developers in top cities like Mumbai, NCR, and Bangalore because I have mobile numbers that were earlier registered in one of these cities and consequently ported. The central theme of most such messages is the attractive offer being extended during the festive season. And many of these offers imply purchase values at significant discounts to what would have been available to early buyers in these projects.
A house like any other commodity will have its price determined in a market by the forces of demand and supply, and for early investors to complain about having got a raw deal may not be quite fair. However, the point here is that time has made some homes cheaper than they were. So should you buy now?
That’s a tough one. Property prices have stayed soft for the past year and realty market cycles are longer both on the up and on the down. The good news is that interest rates have been cut. Will this provide the necessary fillip and lead to a recovery? Any developer would be willing to pay a fortune for the right answer. Given that the sector stands at a crossroads — easier borrowing rates and new fund raising options (REITs) being positives, and high inventory and a cash crunch being the negatives — it might pay to be a little cautious. Like in the stock market, there is no good or bad time to buy. It all depends on what property you are buying and the price at which you are looking to purchase it at. The realty market is likely to get more house specific (stock-specific is the parallel in equity market parlance). I’m not sure if that itself is a bearish sign.
But a greater study of the fundamentals of the home you are about to purchase and an assessment of its longevity potential — based on factors like location, quality of construction, quality of amenities, developments in the area and the profile of gentry — have become necessary for a wise investment today.
Former Editor, Outlook Business and Executive Editor, NDTV Profit, the writer is a personal finance expert. Mail him at firstname.lastname@example.org