The term ‘fence-sitter’ is fashionable when talking about the housing market. A fence-sitter is someone who is actually hopeful of buying something but is waiting for a more suitable time. The underlying sentiment is hesitation, which is an uncomfortable emotion because a difficult decision needs to be made.
People who are content with living on rent are not on the fence about buying a home and there is no pending decision, so they are more comfortable than fence-sitters. If you visualise someone sitting on a fence, it is clear that this is an uncomfortable place to be. There are many reasons why hopeful homebuyers may be indecisive:
1. They may not be sure if they can handle the responsibility of a home loan at this stage in their life. This is a very valid doubt and should be taken seriously. Nobody but the buyer can or should decide whether they are financially ready. Buying a home via a home loan is a big financial decision that has current and future implications.
2. They are not sure whether a certain property is the best possible option within their budget. While this is also a valid question, there is no straightforward answer because there are innumerable properties for sale in every area. It is logistically impossible to inspect all of them, and the buyer should see as many of them as possible. But endlessly inspecting options can itself become a loop of indecision.
3. There may be doubt about an under-construction property. “Is this builder reliable? Will he complete the project as per the promised schedule?” is a valid question. However, there are many means to find out whether the builder can be trusted. Yes, it takes some time and effort to find out what his reputation is, such as by speaking to other people who bought homes from him, checking online forums for reviews of his projects, and asking a legal person or other market experts. If such doubt exists, the buyer should invest this time and effort.
4. “Prices will reduce and I will regret buying now.” This is probably the main doubt causing people to get on the uncomfortable fence. Buying a home is a considerable expense, even with a long-tenured home loan. People worry that they will buy today and find out that prices crash a few months later. By then, they will have made their commitment, and it will be too late. This reason deserves some more exploration. The buyer has seen the model flat in an under-construction project, likes the location and amenities, and has the cash for a down payment. The builder has indicated that he is willing to give a slightly better price if the buyer makes a firm decision. The project is seeing good sales, and many more people visit the site every day. However, the buyer somehow feels — maybe because of what some others told him — that the ‘market will crash’ and prices will plummet soon.
Uncertain times
Unlike the first three reasons, the fourth reason has no basis whatsoever. The COVID-19 pandemic was one of the worst times for the Indian economy and for every Indian. Many people lost their jobs.
Migrant construction labourers left the sites and returned to their native places. The overall sentiment was very depressing, financial confidence was very low, and consumption slowed down. Even then, when blue-chip stocks were tanking, housing prices did not decrease. No doubt, rental rates took a big hit because people living in cities went back to their hometowns to sit out the pandemic. However, despite all the gloom and doom predictions, housing prices held firm. Also, the demand for ownership housing came back with a bang. Far from reducing, housing prices are rising now after four to five years of staying steady. If the property our homebuyer is waiting to buy is in a good project by a strong builder, the only thing that will happen is that prices will go up the longer they wait. Builders who don’t have enough cash to complete their project are not giving ‘distress sale’ prices to get rid of their project. Instead, most of them are tying up with better-off builders to complete the project as per RERA requirements.
Fable of prices
There is no imminent housing market price correction. When experts say that the best time to buy a home is now, that is true because, in any given period, property prices will never again be as affordable as they are now. India’s GDP was at a 22-year high of 8.7% in 2021-22. Despite the Omicron outbreak bringing down GDP growth to 4.1% in the last quarter, housing sales have remained strong and prices have not faltered. In fact, a poll by international news agency Reuters confirms that India’s real estate prices will rise by at least 7.5% in 2022, and by 6% in 2023 and 2024.
Real bargain
Sitting on the fence waiting for prices to fall is a trap. Homebuyers who understand this and do not delay buying their homes, locking in the current rates and benefitting from the still attractive interest rates, will have secured real bargains.
Waiting for lower prices is not a valid reason to postpone buying a home. This does not mean that other reasons are not important. If there is doubt about the builder or project, this should be cleared up. Definitely, nobody should buy a property in a project which is not RERA registered. The RERA website has extensive information about projects registered there.
Nobody should make a hasty decision about buying a home without being 100% sure of their financial capability.
The writer is Chairman, Pharande Spaces, and President, CREDAI (Pune-Metro).
