Factors Favoring Home Buyers, Market Set to Pickup

Factors Favoring Home Buyers, Market Set to Pickup

The Hyderabad residential property market witnessed relatively lower sales this quarter, but the market is slated to pick up in the next few months. “This being the first quarter, the sales in the city were slower, 9 percent against the last quarter’s 12 percent, but with the recent cuts by the RBI, the market should pickup. As of now, the developers are wary of launching big projects because of the GO 45, but once that is revised there will be new launches and more options for people to buy,” says Trivita Roy, Manager, Research and REIC, Jones Lang LaSalle.
A number of factors have recently eased the hardships faced by homebuyers earlier. Any delay on the part of end users in acquiring a home will only be at a higher cost now. However, times are changing and there are several factors that will reduce the issues faced earlier while investing in a home. Developers in they city also foresee an upturn in sales due to the favourable market. “Various factors affect a prospective buyer’s mind. everyone is closing financial transactions for the year and expecting a post-appraisal hike. Lower repo rates will take a few months to reflect in sales. But we can definitely say that in another month there will be more buyers looking to invest in property,” says G Sreekesh, Executive, Sales, Aparna Constructions
The Reserve Bank of India (RBI) has cut the repo rate by 50 basis percentage points which will make home loans cheaper. Housing finance companies and banks are expected to reduce the lending rates shortly. One bank has already offered to re-price its existing home loan at a lower interest rate. Borrowers can switch to the prevailing floating rate that is at a discount to the prime lending rate. The borrower has to pay a one-time ‘switchover fee’ of one percent of the outstanding loan. Some banks have slashed their lending rates by 75-175 basis percentage points. The rate cuts will be applicable to new borrowers.
With the land, input and labour costs soaring, home prices are inching upwards across all micro-markets. According to industry sources, taking into account price increases of the four key construction components – steel, cement, labour and bricks – there is an 18 percent gross rise in construction costs over the last two years.
Moreover, new projects, improved connectivity levels and infrastructure development will only up the soaring land costs. All this implies that any delay on the part of endusers to enter the market would only be at a higher cost later. Also, the increase in the service tax rate from 10.3 percent to 12.36 percent will increase the costs of production for developers.
A significant trend is the availability of built units in select locations.The timing is also appropriate for those keen to invest in the affordable housing category as the lending norms and fiscal sops extended in the Union Budget for 2012-13 provide ample scope for end-users to strike a bargain deal. External commercial borrowings (ECBs) have been allowed for low-cost housing. The developers will be able to lower their interest costs now as there is a significant difference in the interest rates between here and other countries.
Further, the extension of the one percent interest subvention scheme for home loans up to Rs 15 lakhs for affordable housing continues for another year which will benefit homebuyers in the unit prices up to Rs 25 lakhs. The National Housing Bank has been allowed to raise Rs 5,000 crores through tax-free bonds which provides refinance to housing finance companies.
In order to encourage NRIs to invest in residential property, some developers have earmarked property management divisions within the entity to take of care of properties during their absence in India.
Source- TOI

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