Homeward Bound

Buying a house is very special for anyone. Not only it is a matter of pride, but it also is a major landmark moment in one’s life. A lot of money and effort goes into finding that perfect house that fits your personality and serves all the requirements of your family. And, since it is often the biggest purchase one makes in his or her entire life, making all the right decisions is of paramount importance.

Buying a home at the wrong time and without proper homework could prove to be a costly mistake as many homebuyers experienced. They end up paying their EMIs for almost a decade yet fail to get the possession. The ‘dream home’ remains elusive.

The last few years have seen a slew of policy measures to make home-buying a more attractive financial decision. The home loan interest rates are at a record low, the prices of homes have also become marginally lower, the demand has started rising and the tax benefits are plenty. Many states have also cut the stamp duty and allowed builders to sell houses at a price much below the circle rate.

So, is it the right time to take the plunge that you have been thinking about and go ahead to buy that dream home of yours?

According to Ravindra Sudhalkar, CEO, Reliance Home Finance, there are ample policy indicators to suggest that the government will continue to support the revival of the housing sector in the coming months by keeping the interest rates low, providing sops to buyers and developers, while ensuring ample liquidity in the system.

In the last meeting of the Monetary Policy Committee (MPC) of the Reserve Bank of India, the banking regulator for the fifth time in a row retained the repo rate and the reverse repo rate at 4 per cent and 3.35 per cent, respectively, and also assured of maintaining an accommodative stance for as long as needed. This indicates that the home loan rates, which had hit a historically 15-year low in 2020, will continue to remain at the current levels for a good part of 2021-22, Sudhalkar says.

The RBI also proposed to extend a special liquidity facility of Rs 10,000 crore to the National Housing Bank for one year to support the sector.

In the Union Budget 2021-22, the government has extended tax benefits for buyers and sellers of affordable housing. It allowed an additional deduction of Rs 1.5 lakh on interest for loan on affordable houses to be extended till March 31, 2022. It also extended the tax holiday for developers by another year. So, as per the current income tax rules, a buyer of an affordable home can claim a total deduction of up to Rs 1.5 lakh on the principal amount of the home loan, and another Rs 3.5 lakh on the interest paid in a year.

“Hence, affordable house buyers must make their investments in their own homes within the next 3-4 months to ensure they get the low-interest home loans and avail the tax benefits,” Sudhalkar says.

In fact, it is not just the industry insiders who believe that this is the right time to buy a home, even the prospective homebuyers think so. According to a survey conducted by NoBroker.com, a real estate portal, 89 per cent of the respondents across Delhi-NCR, Bangalore, Mumbai, Pune, Chennai and Hyderabad says that it is the best time to buy a home. The survey also revealed that millennials, who have been used to rental lifestyle, are now more eager to buy a home after the pandemic struck, bringing along with it, strict lockdowns first, and then extended work-from-home culture.

Shveta Jain, Managing Director – Residential Services, Savills India, says that while the Covid-19 outbreak has caused economic uncertainty, it cannot be denied that for a home buyer both the acquisition cost and regulatory environment have never been more favourable.

“Rightsizing of units, effective implementation of RERA, corrected capital values and record low interest rates are providing the right purchase platform to a motivated buyer. We do see home buyers making most of this opportunity over the last nine months. It is an opportune time for an end buyer, however, the decision to purchase has to synchronise with his or her individual objectives, including stable cash flows,” she says.

It’s true that home sales have witnessed an uptrend in the last couple of quarters. According to the latest Real Insight Q1 2021 report by PropTiger, home sales saw an increase of 12 per cent in the January-March quarter amid stamp duty cuts by states and home loan rate cuts by banks.

According to the report, builders sold a total of 66,176 homes across top-eight cities in the January-March quarter, a time marked with several state governments, including Maharashtra and Delhi, announcing stamp duty and circle rate reductions to boost buyer sentiment.

Mani Rangarajan, Group COO of Housing.com, Makaan.com and PropTiger.com, says the real estate sector has seen a robust recovery as compared to most of the other industries since the easing of lockdowns last year and this trend would continue in the coming quarters.   

He advises prospective homebuyers to do a thorough research on their current financial capability so as to find out what is the money they can arrange and what can be a comfortable figure for EMI. “Over-stretching at this point of time is not recommended at all as we can still sense some instability because of the pandemic,” says Rangarajan.

The home buyer should also do a thorough check on the reputation and financials of the developers before taking the final plunge. Tips for investors will be to look at all the factors that will determine the future value of the project or the property which will include new road, highway or bridge coming up in the area, any new rules expected from the government or local authorities that will change the dynamics of the region or of the project, apart from checking the finances of the developer.

vishav@outlookindia.com