Homeownership has always been viewed as a matter of prestige in India, as well as it indicates sound financial bearings of a person. Buy a house! is often the advice doled out by the older generation and now we have slowly come to realise that it's not completely unfounded!
COVID-19 has undeniably made us realise the value of having a home for our own. As for months it provided a safe haven for our loved ones and turned into an office, school, theatre and much more! On the other hand, the volatility witnessed in equity market, has driven home the point that investment in real estate offers stability and are a safer bet.
If you are undecided about buying a home, do consider these 5 reasons of why you must act now.
1. Your dream home could cost more in future
Land is a limited resource, while the population will keep growing. Niti Aayog figures estimated the current housing shortage of nearly 25 million, showcasing the vast underlying demand. Increasing urbanisation, growing incomes, and large middle-class households are the combined factors driving demand in the sector. Thus, the undersupply and overdemand situation could lead to higher property costs and limited choice in the future. Considering this and also the fact that real estate is a safer bet than equity in the long term, now is also a good time if you are looking to add real estate in your investment portfolio.
2. Inventory of good ready to move in houses won’t last long
Currently, the real estate market has a good inventory of ready to move in houses in projects by reputed developers. You can truly get your dream home that meets all criteria – location, lifestyle, security, quality and convenience. The construction of many projects was halted due to the lockdown, this may result in delayed delivery of under-construction projects. Additionally, owing to financial uncertainty during the lockdown, many developers may not have the financial wherewithal to complete projects.
A report in MoneyControl quoted Anuj Puri, chairman – ANAROCK Property Consultants, saying that the prices of ready-to-move properties are almost at par with under-construction homes in many areas. This has never happened before - and since developers have curtailed new supply, it is unlikely to happen again. Never have homebuyers had such a tempting choice range, at such low prices, he says.
3. Take advantage of the reduced home loan rates
The home loan rates in India are at a 15 year low after the Reserve Bank of India lowered the repo rate at sub-7% level. Following this, several financial lenders have lowered the home loan rates, with offering rates as low as 6.9%. Cheaper home loan translates into savings for you, which means you can buy a bigger home.
In an interview with Economic Times, Keki Mistry, Vice-Chairman & CEO, HDFC, expressed, “In 40 years of working, I have never seen interest rates for housing loans be sub 7% as they are now.”
4. Its easier now to get higher value home loan
In October 2020, the Reserve Bank of India rationalised risk weights attached to some categories of borrowings above Rs 75 lakhs. This implies that banks would be exposed to lower levels of risk. Hence, they would be more willing to disburse a higher amount of loan.
5. Make most of the limited period of tax benefits
Real estate is among the largest employers in the country, apart from generating direct and indirect employment, it also significantly contributes to the GDP of our nation. Recognising this, the government in order to boost the sector announced measures to encourage people to buy a house. In Maharashtra, the stamp duty has been significantly reduced from 5% to 2% till December 2020 and to 3% until March 2021. Furthermore, the differential between agreement value and circle rate was increased from 10% to 20% (under section 43CA) till June 30, 2021, which is especially beneficial for higher valued homes. The Maharashtra government has also reduced the premiums to be paid by developers by 50% until December 2021.
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