If you have been planning to buy a house, don't postpone your purchase.
Developers are offering discounts, freebies and attractive payment plans.
Tinesh Bhasin finds out more.
Illustration: Uttam Ghosh/Rediff.com
For a middle-class home buyer, this is probably the best time to buy a house.
In the past five years, real estate prices have seen a correction whereas annual household incomes have witnessed moderate growth, making residential property more affordable.
As of financial year 2019, affordability in most cities is estimated to be in the range of six to eight times compared to 11 to 13 times five years back, according to credit rating agency Crisil.
Affordability is the ratio of property price to the annual household income.
"Over the past few years, capital values have remained under pressure due to muted demand. Income levels, however, have grown at a steady pace. Accordingly, purchasing power has improved over the past five years," says Rahul Prithiani, director, CRISIL Research.
During the current slowdown, many buyers have also been sitting on the fence saving up for their purchase and waiting for the right opportunity to buy.
"They have been saving up for their down payments or even outright purchases. For those intent on buying a home, no other investment can really take its place. Such buyers have had a lot of time to watch their savings grow," says Anuj Puri, chairman, ANAROCK Property Consultants.
Puri points out that heftier down payments result in smaller equated monthly instalments.
Even the government has incentivised first-time homebuyers with subsidy schemes.
"There's never been a better time for home purchase," says Puri.
Absorption of new homes has declined at a compounded annual growth rate of 7% over the past six, seven years.
Muted demand has put pressure on capital values leading to buyer-centric market pricing.
There has been a price correction of 5% to 20% across micro-markets in the past two-three years.
Prices are likely to remain range-bound due to unsold inventory.
As buyers have stayed away, developers are offering discounts, freebies and attractive payment plans.
If a developer believes that the buyer is genuine and ready to buy, it's easy to sit across the table and negotiate on the overall pricing.
Affordability has also improved as developers are increasingly launching projects that cater to the demand of buyers in the middle-income segment.
Property experts say the first-time middle-income buyer in top cities typically aims for properties valued between Rs 5 million and Rs 7.5 million.
The share of supply in this ticket bracket was limited till last year, but has been growing since then.
"Developers are now launching smaller units making homes more affordable," says Gagan Randev, national director, capital markets and investment services, Colliers International India.
This scenario is likely to continue in the short term.
Property experts believe that demand will remain muted and prices will remain under pressure on account of the slowdown in volumes due to ongoing liquidity concerns.
"Prices are unlikely to increase in the next year or two," says Prithiani.
But if you have been planning to buy a house, don't postpone your purchase.
"The problem with playing the waiting game is not solely that one cannot time the real estate market," says Puri.
"It is also that locations saturate and the best opportunities do not stay on the market indefinitely. After all, sales in good projects are happening and prices in such projects can rise if the developer elicits sufficient interest for it from the market," Puri points out.
At present, the market has a wealth of affordable opportunities even in ready-to-move options, but those are also the first to go as sentiment revives.