Probably most of the people interested in buying real estate would be holding their decision till the lock down opens due to speculations in the market or risk pertaining to economic conditions. Yet for any clever investor who is observing the current market will testify buying of real estate during lock down to be the smartest move.
Here is why –
1- Reduction in Home loan rates – On 27 March 2020, the Reserve Bank of India (RBI) reduced the repo rate by 75 basis points (bps). The reduction saw the repo rate reduce from 5.15% to 4.40%. New home loan rates start at 8% from 1 March 2020. So indeed this is good time to buy your home if the decision was just hiding behind the corner for some better rates or good units.
2- Low Demand – Value for Money:Real estate is facing deficit demand in the market which leads to generation of various attractive offers by Developers. To maintain the good books, builders are currently offering very low rates, lucrative payment plans and additional offers resulting in lowering the cost of property. End-user can expect to buy a property as low as the launch price during this lock down.
3- Reduction in Stamp Duty – The Maharashtra government on March 6 announced that it is reducing stamp duty on properties by 1% for Mumbai, MMRDA Region and Pune for a period of two years.
4- Passive Income – Various small investment options are being introduced in the market starting as low as 5 lacs in real estate that too with a rental income. This is again an opportunity to create a separate asset class in your portfolio and start a source of passive income.
5- Demand– Supply breakthrough:Due to low demand, discounted rates on good inventories are available. But once the economic condition will start settling, the bargain will reduce and demand will also start floating upwards. The rates will not be as low as they are now during lock down.
6- Segment Shift – Earlier Lower middle class people used to buy 10 to 12 Lakh property. Now middle class will buy those as an investor and rent it out to lower middle income group. Similarly shift will take place on affordable segment likewise. Middle income group will emerge as new investor community.
7- Strike the Iron when it is Hot – We all must have heard this at least once. But it’s time to implement the strategy to gain extensive returns on the investment. Not only the rates are strikingly low, the return on investment that are being offered by some Developers is as high as 15-18%.