If you are a fence-sitter wondering when to buy your dream home, Arun Jaitley has given you enough reasons to embark on this project, seriously. Here are some themes that you need to keep in mind while buying property.

Don’t wait Sentiment in the property markets is upbeat after the Budget, a welcome change from the gloomy picture earlier.

By buying now, you can benefit from the higher deduction amount for home loan interest payment. The increase in the deduction from ₹1.5 lakh to ₹2 lakh can help you save an additional ₹10,000 a year in the 20 per cent tax bracket on the interest you pay. Alternatively, you can take on a higher loan for the same cash outlay (see table).

Prices are not expected to decrease in most localities and growth is expected to pick up. So waiting may not lead you to better prices.

Ask for discounts If you are buying a home for your own use, you may not have much leeway in picking a location, but you can do some bargain hunting. Steep discounts can be availed if the builder is under a financial stress, the project is in early stages of development or if there is a glut of homes in the area.

Still, given that a home is a big investment, you need to do a fair bit of homework before signing an agreement. The Budget does not help a buyer by way of protection (through Real Estate Regulatory Bill) or improved transparency (by single window clearance). Another option is to take advantage of low prices in the secondary market for completed homes.

Buy in growth corridors If you are an investor, consider a few themes based on the Budget. One, you can look at pockets where connectivity will improve. For instance, the proposed metro rail projects in Ahmedabad and Lucknow should help property prices. Likewise, new airports in tier-2 cities can lead to property price appreciation.

Another way to pick your location is based on where job growth is likely. Localities where industrial clusters are proposed should aid job growth and property demand in the nearby areas. And based on the income level of the home buyers in the area, you can go for a low-cost or mid-income home.

You can also look at peripheral locations or tier-2/3 cities where all new residential development is being planned. But be wary of investing in large-scale townships, since there can be long delays in getting clearances. Likewise, caution is needed when buying land, as there is a risk that it may be acquired by the Government for road or industrial development.

That said, while you may dream about doubling your gains year after year, returns are likely to be in the moderate range of 20-30 per cent per year. This is because the property market is becoming mature with supply constraints getting eliminated.

Invest through REITs The Budget offers a new way for investors to profit from a growing property market, by indirect investment. With a small amount of investment, you can indirectly own income-generating properties such as office complexes and retail spaces through Real Estate Investment Trusts (REITs).

These listed funds allow small investors to earn steady rental income and gain from price appreciation in commercial assets, which are usually out of reach due to their high price tags. The advantages are that you can buy a ‘share’ in a swanky office complex for as low as ₹2 lakh. The properties that REITs invest in typically offer a high return on investment — around 10 per cent per year through rent.

While the new instrument sounds promising, there are still many aspects that are to be sorted out, so it will take at least six months before the first REIT is launched. Also, while you can avail home loan and get tax benefits when buying property directly, REITs do not have these benefits.

In the interim, if you have a large corpus of at least ₹1 crore, you can consider investing in real estate private equity funds that invest in commercial property. These funds should benefit when REITs are launched as this provides an exit route for their investments.

Also read : >Don’t sit on the fence

>Make the right moves

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