“Don’t wait to buy real estate, buy real estate and wait.” – Will Rogers
With the entire world hit by Covid19 pandemic and future being uncertain, real estate market activities are also at a standstill. Even those who were looking to buy a home towards the end of 2019 or start of 2020, are now slightly hesitant to take the next step.
The obvious questions in the mind of our clients – Will the property prices correct drastically? I believe market will revive sooner than the general consensus that has been building up. Read our earlier article – 3 Reasons Why Housing Market May Revive)
Should you buy a home now during this pandemic? Let me attempt to answer this.
In my views, if your financial position gives you confidence to buy a home (Read our earlier article- First, Check Your Financial Health), then the following five factors will make it a compelling case to buy a property now.
Lower Interest Rates
With successive repo rate cuts by RBI, repo rate now stands at 4%, it’s lowest in over two decades. Home loan rates are linked to this repo rate. So, lower repo Rate ultimately culminates into lower home loan rates. For instance, SBI is now giving home loan at the rate of 7.5-7.8% as against 8.2-8.55% at the end of 2019.
Partially a Buyer’s Market
Real estate industry is gripped with supply shock, demand shock and liquidity shock all at the same time. Given the rough patch that most of the developers are going through, and the quantum of both ready and under-construction inventories they have, they may be more willing to give attractive deals and flexible payment options.
Recent Cut in Stamp Duty
Maharashtra government had recently cut stamp duty by 1% (reduced it from 6% to 5% of the agreement value). This has reduced the transaction cost by 1%.
History Shows Real Estate Recovers Ahead of the Economy
Out of experience we have seen that housing market recovers before the economy does. With Unlock 1 underway, economic activities are gradually re-starting. However, no one can really time the market. So, if you want to buy a house, then it is advisable to do it before the advantage of current negative sentiments wane away.
Proven Investment Mantra
Investment gurus have always said that it is wise to “Be fearful when others are greedy and greedy when others are fearful.”
To add to the above, it is worth noting that real estate has always been an attractive asset class to stay invested in over long term. To understand what makes me say so, read our article- 7 Reasons Why Real Estate Is The Best Long Term Investment.
Due to the long-term vision with which property investment should be done, timing the market becomes less relevant. Bright future prospect is currently overshadowed by the short-term fear created by Covid19 pandemic. But remember, this too shall pass.
Having said these, I reiterate that investment in real estate needs a lot of research and understanding, mainly because of three reasons-
- It involves huge quantum of investment- mostly one’s life savings
- It is not a very liquid asset – unlike equities, you cannot sell it the day you want
- Transaction cost involved in a real estate deal is very high ranging from 7-9% of the agreement value.
So, it is important to get it right. An expert advisor can ensure help you get it right J
Trust us. Allow us to guide you in this journey.
Neha Agrawal – Co-Founder, OPENMINDS
email@example.com | +91 9820402693 | www.openminds.co.in