Mutual Funds »Funds»MF News»MF News Details
MF News Details
Back

Buying a home: Wait and watch is the mantra

Dipta Joshi / Mumbai 01 Sep 11 | 12:16 AM

Conventional wisdom: If you are buying your first house, don’t try to time the market. The argument: Even if you are entering in a high interest rate scenario, over a 15-20 year period, there will be cycles when rates will come down.

But, then, what can one do about spiralling property prices, especially in cities like Mumbai and Bangalore? If one were to believe builders, realty prices will only go up.

Widgets Magazine

“Close to 500 projects haven’t taken off because of various pending approvals. So, demand still exceeds supply and we have been able to hold on to our rates," says Sunil Mantri, ex-president, Maharashtra Chamber of Housing Industry and chairman, Sunil Mantri Group.

However, even he agrees that once project approvals start, the glut in supply could lead to pricing pressure. On the other hand, the burgeoning debt on the realty company’s balance sheets and consistent pressure on their stock prices tells another story.

In addition, decisions by the Supreme Court in the case of Noida Extension and the recent penalty by the Competition Commission of India on DLF, gives the impression that there is considerable pressure on this sector.

STRATEGY
No wonder, some experts believe postponing buying for the next six to nine months could help enter at lower levels – by at least 15-20 per cent. “What will also help is that interest rates are at their peak and are likely to move down in the next six months, even if there is another hike," says Sunil Rohokale, executive director, Ask Group.

Sales are anyway down. A number of reports have pointed out that in cities like Mumbai, property registrations are down as rentals are going up sharply.

The gap between the customer’s affordability and reigning property prices has widened, making purchases difficult for customers.

“The slowdown in sales is evident. Normally, projects that should be sold out within 30-odd months will now take around 72 months. This will impact the developer’s cash flows," says Pankaj Kapoor, of property research firm Liases Foras.

Perhaps the first signs of a fall in price are already showing. “Six months back, no builder would be willing to budge from the rate he had announced. Today, they are open to negotiations, even if it is a reduction of just Rs 200 -300 per sq ft," says Wali Chaudhari, proprietor of Pyramid Consultants, a property brokerage firm. He said one could afford to wait if not getting the right deal.

Anand Narayan, national director, Knight Frank India, the property consultants, believes that while things are bad and could go worse, buyers could get good options in cities besides Mumbai. "Sales have slowed, though the liquidity issue is not as widespread. It may become acute in some time. Developers are already offering some discounts. But I see little room for prices to drop in projects that were launched earlier. Doing so would mean offering prices lower than what existing customers have paid," he said.

Outside Mumbai, there are fewer affordability issues in Gurgaon, Pune, Noida and some other places. A large segment still has the option to buy within the city perimeter. Pricing is better there, though there has been a rise across the country.

Conventional wisdom often goads customers to prefer purchasing property instead of staying on rent.

But, given the high cost of purchase, waiting makes sense. Home loan rates are at 11 per cent, property prices have risen 27 per cent in a year in cities like Mumbai and the loan to value of 80:20 means the dice is heavily loaded against the buyer. Adopt a wait-and-watch policy.

Widgets Magazine

Comments

    14 May 12 at 01:56 PM
By: Sedu Flat Iron

I know the man who sale chi flat iron in the street. I often buy the chi hair straightener from the man. The man have chi for sale at discount price. He sale the ghd hair straightener at lowest price. But I only like the chi Babyliss Pro and chi Sedu Flat Iron. Though they are exmensive than the ghd hair straightener.

    07 Jan 12 at 09:07 PM
By: Muay Thai

A good blog with some useful information, like Martial Arts for Children. You can also check out Self Defense Laws, it has some good information. Lastly, Muay Thai Equipment is a good article as well.

    26 Nov 11 at 12:15 PM
By: nike free run

Polyurethane traction nike free run to you're inexpensive air max sneakers. What is more nike air max 90 Current Mens Sneakers have excellent permeability. first of all it is about the exterior of Nike Air Max 90 Mens Sneakers Rubber lug outsole provides superior traction in the outsole provides superior durability, You can see decorated by some shining silver,at such low price I am sure you will regret if you miss these low cost air max shoes. which also can relieve some pressures and protect your feet. After all these please give another glance into the price once more! It is reall especially the trademark area which is really eye-catching. surprise to get such nike free australia prominent footwear

    31 Oct 11 at 03:48 PM
By: north face store

Despite outspoken north face store to Kevorkian's campaign, many people who were sick begged him to help them die, forcing the United States to confront the ethical issues surrounding how best to treat the pain and suffering of the terminally ill.2

    24 Oct 11 at 10:36 AM
By: df

A call for government redistribution of wealth and reliance on street activism doesn't appeal the north face denali jacket to the swath of suburban churchgoers with conservative political and religious leanings, he said.

    22 Oct 11 at 01:30 PM
By: Self Storage

very nice set of ideas shared in this blog.i really like the idea of waiting for few time and its good strategy. Really good blog. Self Storage :.storages.com.sg



Widgets Magazine

Poll

It has been a year since demonetisation was announced. What is your view about the move?



Fund Selector

Select Funds based on returns.
Category
Period
Returns
AUM
   Search

Online Portfolio

You can create Online Portfolio here using the below button.

Widgets Magazine