COO of Square Yards Kanika Gupta Shori says in a comment that since the past few quarters, the real estate markets in India have been going through a phase of massive change.
Most retail investors and homebuyers make the mistake of entering the market when the trend shows the prices are peaking.
From the past few quarters, the real estate market in India has been going through a phase of massive change. The regulatory reforms under the Real Estate Regulatory Act (RERA), and Goods & Services Tax (GST) to an extent, have led the sector in a certain direction.
It is mandatory to be in compliance with the provisions of RERA, which attempts to make sure that projects are delivered in time and the money paid by buyers for certain projects is not squandered for other purposes.
Under RERA fly-by-night operators are removed from the market and only the most-committed players will be able to navigate the roadmap. This will benefit both buyers and sellers, in the long term.
The combination of excess supply, high prices and low consumption has led to huge inventories while the consumption side had been impacted by demonetization. Clearly, it is a buyers’ market for now – and for the next few quarters.
Because of RERA developers are now focusing on completing their existing projects. The new home launches, across top eight cities in India, have gone down by more than 75 per cent in the third quarter of the current fiscal, as per industry research reports.
The overall number of project launches has gone down by more than 40 per cent in the first nine months of the previous calendar year. These trends imply that the supply side will gradually find some equilibrium with demand, and prices will subsequently start picking up pace.
In view of current excess supply, property buyers are in a better position to negotiate. The National Capital Region (NCR) and Mumbai Metropolitan Region (MMR) have around 200,000 and 180,000 unsold units respectively.
The excess liquidity in the banking system have led the RBI rejig the key lending rates. Resultantly, the home loan interest rates that were at around 9.5 per cent in 2016 have now been floating in the range between 8.3-8.4 per cent.
So people can hope to have considerable savings in the EMI costs. It is expected that the home loan rates will remain low for the next several quarters and may even come down further.
Considering the average annual rental yields at 5-6 percent, there is not much difference between the costs of rent and owning a home.