Diverse markets have been severely affected by COVID-19. Although some sectors such as healthcare have benefited, due to the pandemic, a few others, such as the real estate industry, are facing a downtrend in the market. However, the pandemic has turned out as a surprisingly positive development for those who are looking to buy homes.
The unstable share market and the struggle to manage expectations of common assets have increased the need for a secure investment, such as by investing in real estate. Also, with lower loan rates and a wide-open market, private land is at its best today. Besides, with lower interest rates and a buyer’s market, residential real estate is at its peak now.
According to a report, buyer preferences are currently dominant in ready-to-move homes, with the highest demand for homes priced between Rs 40 lakh and Rs 1.25 crore. In addition, almost 80 percent of housing deals since the pandemic have been made by end-users themselves.
The final decision to invest in a property is always of the buyer and even though the ball is in their court to make the best choice, they should consider a few factors. SBP Group brings you the following reasons you should consider before purchasing a house after COVID-19 outbreak:
The Rate of Interest on Home Loans are at a Record Low
In the recent past, the Reserve Bank of India ( RBI) has cut the repo rate on many occasions, resulting in interest rates for home loans declining to sub-7 percent levels. Now, from that viewpoint, if they have the requisite margin funds, aspiring homebuyers should not attempt to let go of these record-low prices.
Aspiring buyers must realize that repo-linked home loans come with a scope of customer risk and only those borrowers with credit scores above 750-800 are given the lowest home loan rates. Therefore, before applying for the loan, they must review their credit scores, and if they find it to be lower than 750, they should take steps to enhance it not only to get the best loan deals but also to enjoy low EMIs during the loan period.
Opportunity for Buyers
The RBI has ordered that housing finance companies (HFCs) preserve an LCR liquidity buffer, which will facilitate stability of HFCs to possible liquidity disruptions by ensuring that they have sufficient funds to withstand any acute 30-day liquidity stress scenario.
The property market has been overheated in past crisis situations, resulting from higher valuations, lower loan-to-value ratios (LTV), and volatile interest rates. However, for purchasers with higher LTVs, lower valuation, and cheaper credit availability, the scenario is currently more favorable.
Availability of Property at Fair Prices
In current times, the availability of housing units at affordable prices is another compelling reason to purchase one’s dream home. As rates are as low as they can get and some developers are willing to bargain more, it is possibly the best time for end-users to purchase homes.
Since the businesses have been at a relative halt in the first half of 2020, buyers and distributors are giving buyers a reduced price. The economic downturn has also played its part in reducing rates further. This has made it very cost-effective to buy a home.
Pankaj Kapoor, founder, and MD, Liases Foras, a real estate research company, said that ‘For those who have been waiting to buy for a long time, now is an apt time. The real estate industry has transformed a buyer’s market for the first time in about 15 years as terms have been dictated by builders and suppliers over the last 10-15 years. one can negotiate hard and get the house at a relatively low-than-quoted price.
Real Estate, a Secure Asset
Not only has the uncertainty and unpredictability of the stock market diminished income, but investors’ confidence as well. As a stable asset class, this has also helped real estate market gain positive momentum. As luxury property buyers usually have a higher stake in the stock market, the luxury property market can be affected initially. With rationalization in prices, rental yields are expected to grow if factors like job stability and gradual economic revival are presumed to remain favorable. It will have a positive effect on improving the behavior of the customer.
Good ventures will not offer lucrative direct discounts. In terms of complimentary car parking or waiver of fees or phased easy payment plans, buyers can, however, get some composite sweetened offers.
Future Price Speculations
Although the industry has had its share of the decline in price of homes, the trends suggest that there will be no further decrease in rates. Alternatively, with the time of lockdown relaxed across the country, these rates are expected to increase.
The industry experts recommend that the sale be made at the earliest as the timing of investing matters in the real estate market. Since the pandemic has resulted in a serious financial hit to individuals, there is also an increase in the feeling of procuring a safer type of homes. Relative real estate stability is also attracting people to invest their money in the market.
Therefore, for the reasons stated above, The present condition has made it a good time to buy a property. however, you must not rush in to get the loan and purchase the house. Instead, to find the best according to your needs, compare various loans provided by the lenders. Take advice from property consultants if you have you and do proper research on developer and project you are interested to invest in.
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