2017 is a good time for new home buyers to buy affordable housing in Thane, Navi Mumbai: Experts
1. SBI, LIC Housing Finance, HDFC Ltd, etc., have cut their home loan interest rates on loans below Rs 30 lakh by up to 30 basis points
2. One can look at Thane and Navi Mumbai for investing in affordable housing in Mumbai, says Sai Estate Consultants
3. First time home buyers can invest in parts like Vasai-Virar which lies 50 km north of Mumbai, says NIRMAL
As the banks home loan interest rates are at all time low and the government has announced policies and reforms in the real estate sector, the present year is the good period for the first-time home buyers to buy affordable housing in metros, say experts.
With an aim to achieve the government's vision of 'Housing for All by 2022', banks and housing finance companies like State Bank of India (SBI),LIC Housing Finance, HDFC, ICICI Bank, etc., have slashed their interest rates on home loans by up to 30 basis points in May this year.
SBI had announced rate cut on home loans by 25 basis points (bps) to 8.35% per annum for all salaried class customers for loans up to Rs 30 lakh in May this year.
Taking cues from SBI, housing finance company LIC Housing Finance too announced a home loan product 'Griha Siddhi' wherein it offer interest rate at 8.40% for loans up to Rs 25 lakh, Moneycontrol reported on May 10.
The NBFC LIC Housing Finance will offer loans to women at 8.35% for loans under 'Griha Siddhi' product, it said.
Similarly, private housing finance player Housing Development Finance Corporation Ltd (HDFC) on May 15 lowered its mortgage pricing for new low-cost home loans to 8.35% from 8.50% for loan below Rs 30 lakh for women borrowers and by 10 basis points to 8.40% for men, according to PTI report.
To match with the rates offered by competitors, ICICI Bank too slashed the rates by 30 basis points for home loans up to Rs 30 lakh on May 15.
The ICICI Bank has reduced its interest rate on home loans up to Rs 30 lakh for salaried women borrowers at 8.35% while for others its has kept the rate at 8.40%.
To bring transparency and accountability into the country's real estate sector, the government implemented the Real Estate Regulation and Development (RERA) Act nationwide on May 1 this year and prior to that it gave infrastructure status to 'affordable housing' segment in its Union Budget 2017-18, which have boosted the sentiments of first-time home buyers.
As banks have lowered their interest rates and the government has taken several initiatives to boost the affordable housing segment, we managed to speak to experts from the real estate sector to understand whether 2017 is the good time to buy the affordable housing property in metros like Mumbai, Delhi, etc.,
“Between January 2017 - mid 2018 is a good phase to buy properties, beyond 2018 there will be a slight increase in the prices as the unsold stock by then would have been absorbed,” property dealer Sai Estate Consultants director Amit Wadhwani told Zeebiz.com.
“Dumping ground issue and the stay order by high court on construction on open grounds will be resolved in the next few months; all this will ensure that there is fresh supply coming into the market. Having said that the next 18 months are a good time to buy properties in metros like Delhi and Mumbai,” Wadhwani added.
“2017 is an opportune time for potential buyers to close an affordable housing option. The slew of government policies and reforms such as infrastructure status for affordable housing, RERA Act and GST among others, underlines the Centre’s positive approach to affordable housing,” real estate company NIRMAL director Rajeev Jain said.
In order to make decision whether to buy ready-to-move property or under-construction one, experts have suggested that buyer should make this decision depending upon the accessibility of funds, property affordability and the possession timeline.
"Ready-to-move-in flats come with benefits like zero delivery risk, tax benefits on home loans, rental yield,savings on service tax and value added tax (VAT) which amounts to savings up to 6% in most states in India,”cited Wadhwani.
“Under-construction inventory could come cheaper but carries performance risk considering dynamic nature of real estate compliances in India at present,” he further said.
Echoing similar views, Jain said, “Within the housing market, the ready-for-possession segment provides end-buyers the ability to avoid risks that conventionally come with buying under-construction properties. Undue delays which are generally a parcel of under-construction doesn’t extend to ready apartments."
“On the hand, property buying within on–going projects costs substantially lower than ready-to-move in options. However, if buyers must avail this benefit they should be willing to wait until project completion. Ultimately, the final choice must account for accessibility of funds, property affordability and the possession timeline.” Jain added.
As per Ajmera Realty, ready-to-move in flats have zero delivery risk and have good returns on investment as compared to under-construction flats.
“Zero delivery risk, turn around point is less, gets lot of tax benefits and home loan as interest level goes down because its ready-to-move house, trust on developers as the flat is ready and buyer can move in any time without any doubt, returns on investment,” Ajmera Realty director Dhaval Ajmera told Zeebiz.
The real estate industry players have recommended places like Thane, Navi Mumbai, Panvel, Kalyan, Karjat, Greater Noida West, NH24 Bypass and Raj Nagar, among others for buying affordable housing property .
“One can look at Thane with good infrastructure, great valuations, broader roads, predictable construction quality and on time possessions. Locations like Navi Mumbai, the connectivity between APMC market and Pune and outskirts of Panvel,” cited Wadhwani.
“First time home buyers can invest in parts like Vasai-Virar which lies 50 km north of Mumbai. Affordable projects in Raigad - Karjat, Khopoli and Pali districts are fall within the Mumbai Metropolitan Region (MMR),” Jain said.
Jain further said, “Kalyan-Dombivli, too have a witnessed a boom in this (affordable housing) sector and the proposed extension of the Navi Mumbai Metro will further fuel growth for this segment. The sky rocketed prices in Delhi has made housing unreasonable for investors, but micro-markets in Greater Noida West, NH24 Bypass and Raj Nagar suit the affordable range.”
“Places like Kalyan, Karjat, Panvel and Navi Mumbai should be taken into consideration by first time home buyers. Property prices are less than central and western Mumbai and also spacious houses available in these areas. Connectivity to these places is smooth via rail and roadways,”cited Ajmera.