MUMBAI: Is it a good idea to go house hunting on a rainy day? Well, for all you know, your efforts might pay off: One is likely to bag a good deal on a house during the monsoon.
Since demand for properties is less in the monsoon, developers see a dip in the number of inquiries, too. Hence, low property-sales coupled with high inventory levels are reason why developers may go an extra mile in giving customers a better deal now.
Ashutosh Limaye, head (research) at Jones Lang La'Salle India, says, "Since residential sales have been stagnant and inventory levels remain high, developers will be more than willing to negotiate property rates and give home buyers a good deal." He, however, adds unlike in the festive season, developers don't give discounts openly during the monsoon.
Inventory levels: In the metros, the absorption rates and inventories are increasing. This clearly indicates sales of residential units are not keeping pace with supply. Pujit Aggarwal, managing director and chief executive, Orbit Corporation, says, "During monsoon, the sales volume of residential units easily dips by 20-25 per cent." For the January-March period, the level of unsold inventory in Bangalore and Kolkata is high, compared to the year-ago period.
"Inventory levels are so high that cities such as Mumbai, Bangalore and Delhi have unsold stock that can last for 34, 23 and 20 months, respectively," says Limaye.
Offers/discounts: In monsoon, builders may lure customers with benefits over and above their usual offers. Sanjay Dutt, executive managing director (South Asia) at Cushman and Wakefield, says a number of builders have come up with schemes to attract customers and reduce inventory levels. "The offers range from 80-20 schemes, zero booking amounts, no pre-EMI (equated monthly instalment) and no floor-rise charge schemes to paying a fixed percentage at time of booking and the rest on possession."
A few developers also offer free furnishings such as modular kitchens and air conditioners. "Apart from this, some developers also offer cash discounts and/or free parking, especially for properties in the mid-segment, which are price-sensitive," Dutt adds. Discounts and offers vary, depending on the builder and the city the developer is based in.
However, there isn't a right time for someone looking to buy a first home, as his/her decision would depend on the need and urgency for a house.
Home-buying in an off-season: Since the monsoon is followed by the Pitrupaksh/Shraadh period, real estate experts say property Sales get impacted heavily. Niranjan Hiranandani, managing director of Hiranandani Group, says, "The reason behind this is pitrupaksha is considered an inauspicious period, and most potential home-buyers prefer booking flats on occasions such as Diwali, Dussehra and Gudi-padwa."
Therefore, developers may not advertise monsoon-specific discounts, though they would be ready to negotiate if a potential buyer shows interest. Experts say developers advertise their discounts only on occasions such as Diwali and Dusshera.
There is immense scope for bargain in the central Mumbai region, as about 40 million sq ft area is under development and would be up for sale in two to five years. Hence, we could expect some property price cuts there, owing to the heavy supply," says Aggarwal of Orbit.
Advantages: Hunting for a house in the rains could be painful. However, this provides an opportunity to check the quality of a flat's construction. Home buyers could check for water seepage or cracks that might have developed due to insufficient waterproofing by the developer. Additionally, one could see if the area suffers from water-logging.
The maintenance of sample flats and societies during monsoon could be difficult. Therefore, this would help home buyers get a real picture of what the house would be like during rains. It would also help one assess whether he/she plans to buy a plot of land. One could negotiate for a lower price if the area is prone to flooding.
Home loans: Currently, banks offer home loans of up to Rs 75 lakh at 10-10.25 per cent. However, if the loan amount is higher, banks may charge a premium of 25 basis points on the loan. "As soon as monsoon is over, home loan disbursements record an increase," says a banking official. Therefore, if the person has a good credit history and relationship with the bank, he/she could use this period to negotiate with the bank for better rates.