DELHI: Buyer paralysis – or, as it is popularly known these days, the ‘wait-and-watch’ syndrome – is one of the main reasons today why aspiring home owners do not make their move. There are various reasons why people prefer to sit on the fence rather than in their dream home. Probably the most significant one is the negative market messaging via various information channels.
In India today, fence-sitting buyers are waiting for one of two things to happen – for property prices to come tumbling down, and for home loan interest rates to be brought so low as to become irresistible. Of these two factors, a correction in property prices would definitely be the stronger incentive. Obviously, a combination of both would be the most preferred scenario.
For home-buyers-in-waiting, a deeper understanding of the dynamics of the real estate market – and the various options open to them – can often bring them closer to finally achieving their goals:
Price corrections do not happen the way most people imagine, if they happen at all. In the first place, they do not take place uniformly across all cities, but only in cities – and more importantly, in locations – where there is too much stock and no sales. If sales are taking place, even at a slower rate, prices will not drop. This is in fact, one of the main reasons why investment in the right property at the right location is such a safe bet.
Home loan rates are decided by the state of the economy – banks cannot arbitrarily bring down interest rates, even if doing so would increase disbursal and therefore their own business. When the economy improves, so do lending norms. The factors that positively affect economic performance cannot be willed into motion, but depend on other macro factors. Moreover, the monthly outgoings on an existing home loan will automatically decrease when the interest rates come down (provided the loan is on a floating and not fixed rate of interest).
Home purchase and property investment are two very separate concepts. A home is something we buy because we intend to put them to use and make our lives more secure and comfortable. An investment in property is something we buy in order to sell it at a profit few years down the line or to rent it out until then. For homeowners their homes are a source of stability and security, while for investors their holdings are tradable commodities.
Size DOES matter – but not all that much. If you are in a position to buy a 2BHK in a good location today, you can be assured that it will appreciate in value. Assuming that you expect your income to grow steadily as well, you will always be able to upgrade to a bigger home in a few years. The appreciating nature of a well-chosen property also means waiting until you can make that hefty down-payment on a larger home, may not work simply because the prices for such homes would also have increased.
Like all mind-sets, the ‘wait-and-watch’ stance can become a habit. The decision to postpone the purchase of a home should not be on the basis of limited information. In fact, such a course can be self-defeating and can put your dream home further and further out of reach.