Slow economy makes time right to buy property
Jan 07, 2014
Source : The Times of India

 

MUMBAI: The Indian economy has had another tough year. Inflation went as high as 7.52 per cent, job opportunities reduced significantly across industries, the rupee saw steady erosion against the US dollar and market sentiments reached what was possibly their lowest point ever. And yet, things could be worse.

During the depths of the US economic crisis, entire American cities turned into ghost towns. People lost their jobs and were reduced to living in tent colonies, trailers and on the streets. Banks foreclosed countless mortgages which the borrowers could no longer afford to pay. Homes were put on the market at ridiculously under-valued prices and still found no buyers.

The scenario is quite different in India. Jobs were lost, but the situation was definitely not as severe as in the US, where people not only lost jobs but also their pensions to the ailing economy. While there has been an increase in home loan defaulters in India, there has been no glut of foreclosed homes on the market.

Most middle-class Indians have been able to continue paying their EMIs and keep their homes. This is largely thanks to our conservative banking system, which requires banks to do multiple checks before allowing a home loan to go through. Also, Indians consider their homes their most important possessions, and therefore paying their financial obligations towards them is their highest priority.

It is also known that because property prices are a function of demand, they tend to reduce in times of economic uncertainty because that is the only way to keep sales going. This is the ideal time for property investors to pick up properties at lower costs and rent them out to purchase-averse families. When the economy improves, so will the appetite for home ownership. A rise in property prices will follow naturally, resulting in a tidy profit when the property is put up for sale.

It is not possible to ascertain exactly when property prices will reach their lowest point – and start picking up again after that. However, one good indicator is the job scenario. When the industries that drive the economy start stepping up on hiring, the economy improves.

Going by news reports, 2014 is going to be a year of massive hiring for India’s banking and Information Technology industries. This will mark the onset of economic revival – and therefore a pickup in demand for properties, which will signal a hardening of property rates.

While the reduced sentiments prevail, developers and investors in India’s larger cities are still open to negotiation. Moreover, many of the new projects that were launched in the low economic period featured significantly reduced price tags. Thus, is this the fabled ‘market bottom’ that every property buyer or investor considers the magical entry point? Impossible to say… but whenever it does come, it will not last forever.

Latest Realty News

Mumbai office realty: Western suburbs new growth centre
Jan 07, 2014
MUMBAI: Looking back on 2013, the prevailing attitude among businesses toward the economy was “wait and see. The decision to take up more real estate office space was mostly put on hold; or companies aggressively looked to bring down their costs. Corporates put their investment decisions on hold, waiting to see how the economic scenario unfolds especially in light of the forth-coming national elections.
Operation township
Jan 07, 2014
MUMBAI: Till recently, buying a property called for some painful compromises. Budget restrictions meant you could only buy in specific residential areas, regardless of whether there were educational institutions, playgrounds, hospitals, shopping centres, connectivity to your place of work, or entertainment hubs in the vicinity, apart from availability and reliability of utilities like power and water. Real estate players were quick to recognise this and come up with a creative solution—townships
12% drop in new residential project launches in 2013 as over last year
Jan 07, 2014
MUMBAI: There has been a drop of 12% in new residential project launches in 2013 as over last year, a latest report from international property consultants Cushman & Wakefield says. The total estimated unit launches were recorded at 172,500 units across major eight cities of India with Bengaluru recording the largest number of units launched recording a rise 15%. Chennai on the other hand saw the sharpest decline in launches of new residential units which represented a drop of 39% over last year
City property owners get relief from new tax regime, for now
Jan 07, 2014
MUMBAI: Property owners in Mumbai have received interim relief from a new capital value-based property tax regime that may increase taxes by up to 300 per cent, with the Bombay High Court intervening in the matter.
Hike in ready reckoner rates is anti-middle class: CREDAI Pune
Jan 07, 2014
PUNE: The Confederation of Real Estate Developers' Association of India (CREDAI) Pune and Maharashtra termed the recent changes to the ready reckoner by the State Government as anti-middle class.
Real estate sector: Growth starting, but no bull-run yet
Jan 07, 2014
MUMBAI: The year 2013 was a year of survival for the real estate sector, but expectations are now high among developers and analysts. The industry is pinning hopes on a mid-year turnaround after the General Elections, it is not likely to materialise given the time lag for policy implementation.
New RR rates hike cost of old flats in Mumbai too
Jan 06, 2014
MUMBAI: If you choose to buy a flat in an old building today, you won’t be able to avail of the full 30% depreciation in the property‘s value. The up to 20% hike in ready reckoner (RR) rates for properties this year has lowered the depreciation benefit for flats in 20-year-old buildings to merely 2% to 11%. As a result, stamp duty to be paid on new and old flats will no longer vary substantially.
Koregaon Park realty tops rate chart in Pune
Jan 06, 2014
PUNE: The rise in ready reckoner rates for 2014 may have dropped compared to 2013, but the growth story for some city areas remains robust. The rates for residential areas have remained high for Koregaon Park, Erandawane, Shivajinagar, Kothrud and Kalyaninagar. In Pimpri Chinchwad municipal corporation limit, areas including Pimple Gurav, Pimple Saudagar, Wakad and Pimple Nilakh have registered higher rates. Interestingly, apart from fringe areas that are recording growth, there is much activity
PMC may not hike property tax next fiscal
Jan 06, 2014
PUNE: Chances are that citizens will not be burdened with an increase in property tax in the next financial year. The civic administration has submitted a proposal to the standing committee, suggesting that the levy should not be hiked.
No choice but to pass on hike to buyers: Pune builders
Jan 06, 2014
PUNE: The overall rise in the ready reckoner (RR) rates for various parts of the city and suburban areas will add to the financial burden of prospective home buyers, real estate developers said.

Latest Realty News Of State

Realty Talk's