The Hindu Business Line : Home buyers in the grip of ‘Diwali dilemma’

To buy or not to buy is the dilemma home seekers face as Diwali draws closer. As always, and this time too, developers have rolled out festive offers ranging from freebies to equated monthly instalments (EMI) subvention.

Realty experts, while agreeing that post-Diwali could bring some degree of clarity in its wake in the market, say postponement of a decision to buy could also see buyers miss out on choice properties such as corner plots and penthouses in select locations.

The buyers’ dilemma seems to be compounded by the high home loan interest regime. Many first time home buyers feel that prices could come down post-Diwali and a decision could be taken then due to better affordability. There are also many like Mr Virendra D. Mhaiskar, Chairman, IRB Infrastructure Developers Ltd, who are sure real-estate prices will fall in the next two months.

Under the circumstances, total upfront payments today command a discount of anywhere between 6 per cent and 15 per cent in some projects, especially those in the launch stage.

A few builders offer cash discounts and those who offer freebies such as white goods, modular kitchens, furnished flats and free parking, besides free registration of property, are insistent that they come at a cost and are as good as a cash discount. The offers generally work out to about 5 per cent of the property cost.

More realistic pattern

Just like in the stock market you cannot predict when the realty market hits rock bottom, says Mr Anshuman Magazine, Chairman and Managing Director, CB Richard Ellis, while pointing out that 2009 could be a difficult year and the woes of the developers could worsen if sales remain sluggish.

Mr Magazine says one mistake many tend to make is to benchmark realty sales to what happened during the last couple of years when properties were sold within a couple of days of launch or even before ‘a shovel was put to earth.’ This has now given way to a more realistic pattern where bookings start as construction commences and rises as the project progresses to end even after people start moving in. The days of bookings happening on receipt of SMS and display of model flats are definitely over as investors are long gone , he says.

Advising caution, he says one could go ahead if the location is right, documents clear and infrastructure in place. A reality check on whether the property qualifies as a sound investment in the long term too is required. Those who could afford to wait could benefit.

WAIT-AND-WATCH

The General Secretary of the Builders Association of India, Mr Anand Gupta, feels buyers should continue to wait for a couple of months before taking a call.

The offers from free car parking to EMI subvention are definitely a step towards attracting buyers but it appears to be a right step at the wrong time.

These freebies, though welcome, are more to do with the liquidity position of developers rather than market-driven. A realistic picture will emerge in a couple of months to take a buy call, he feels.

FOR A BUY CALL

Mr Arun Kumar Agarwal, Deputy General Manager and Business Head (PB)-1, State Bank of India, making it clear that he is talking in his personal capacity, says he cannot ask home-seekers to go out and buy but he is for a definite buy call, especially in Mumbai where prices had skyrocketed during the last three to four years. “What I missed at Rs 2,300 a sq.ft is now over Rs 4,500,” he rues.

A leading developer who did not wish to be quoted says a buy decision is fine for properties where the sq.ft rate is around Rs 2,500, as they stand little chance of a steep correction and have every possibility to rise further as construction cost is spiralling.

However, a more realistic approach should be adopted on the super luxury and high-end units, given the current economic scenario and high interest rates. The premium segment requires careful evaluation, especially in over-heated markets such as Gurgaon, Jaipur, Kochi, Bangalore and a few metros, he cautions.

More Stories on : Real Estate & Construction | Housing Finance

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page