BEST TIME FOR HOME OWNERSHIP

The Diwali of 2021 has come as a relief to the entire economy. Reflecting the same, over the last months, several banks and housing finance companies have announced cuts in their home loan rates. While it is a reflection of high liquidity and lower interest rates in the economy, the cut also means that there is a growing demand for new home loans, and none of the financial institutions wants to miss out on that. CREDAI-MCHI feels prospective home buyers are finding this time suitable, given the discounts on offer by developers and low interest rates in the economy.

Rising Demand

Housing demands has rose sharply in last 6 months. Reasons such as cut in stamp duty, discounts offered by various developers and low interest rates have acted as a catalyst to the housing demand. CREDAI-MCHI strongly trusts that  the pandemic has been a big driver of demand for housing as people have realised they need more space in the house for work from home, education, quarantine among others. President of CREDAI MCHI, Mr. Deepak Goradia told this author “While many who were comfortable living on rent, now feel the need for a their own home due to the pandemic, many developers have seen the clientele who are families looking for bigger homes following the increased space requirement because of work from home, study from home and Covid protocols.”

Price Rise on the Horizon ?

CREDAI-MCHI is of an opinion that prices shall rise soon considering the rising price of construction materials and rising demand of homes. It may be noted that the real estate prices have been dipping, and the fall has been arrested now, albeit in the low range categorically. After remaining stagnant from the past 6 to 7 years, real estate prices are beginning to recover is select pockets and it is expected that while developers will keep a close eye on how the inventory position pans out, the supply shortage will certainly cause prices to rise from that prevailing 12 months back. The author expects prices to rise at 1.3 to 1.4 x from current levels over the next 3 years, or 4 to 5% on a CAGR basis. MMR real estate market is showing signs of ready recovery with both residential and commercial property segments recording healthy growth in the current quarter. It should be noted that with significantly increased demand coupled with rising input costs, the price stalemate has ended. The author sees an escalation in all segments of housing soon after Diwali 2021. President of CREDAI-MCHI Mr. Deepak Goradia says “ The input costs of construction materials have gone up and are steadily rising. Labour costs are also rising due to shortage in labour availability due to pandemic. These factors will make sure to record a price rise soon. It may be noted that cement prices have risen almost 2.5 times along with steel prices and hence a price rise in the affordable housing segment as well as other segments is just round the corner”

Is this the right time to invest in a new Home?

If you have been saving to buy a house, this is THE time. Apart from a lower EMI, a bigger advantage is that a lower interest rate increases the eligibility of a customer. For example, if you are eligible for a loan for which the EMI should be up to Rs 50,000, then, if at an interest rate of 8% you can take a loan of Rs 60 lakh, at a lower rate of 6.7% the loan amount can go up to Rs 66 lakh.

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