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By Karishma Patel • January 24, 2016

Where should I invest in India? Is this the right time for buying a property ?


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INTRODUCTION:

The sun shining over the horizon, clouds dotted with birds, a river flowing by quietly, and a pretty garden abutting a small house. This is how most children are primed to imagine their dream home.

However, in the real world, a house is just another commodity made and sold by companies whose aim is to make as much money as possible. So everyone must be thinking ' Where should I invest in India? Is this the right time for buying a property ? ' In today's complex world of real estate, which offers choices that are mindboggling, let's look at the forces that are driving the markets, so that you can take an informed decision about buying a house.



SLOW SALES

The demand for properties -residential as well as commercial- depends upon the performance of the economy. However, local factors, too, matter. So, properties in one city or a location within a city can perform differently from each other depending upon the state of the local economy and factors such as infrastructure.

The market goes through phases of growth as well as depression. For instance, at present, there are more houses ready for sale than there is demand for. If we look at the difficulties developers are facing in selling homes, the Indian market is in a depression, though still not at the lowest point of the trough.

 

DEMAND GAP

In spite of slowing demand, developers are unfazed and continue to launch project after project . There has been no decline in new launches compared with the year-ago period.

Developers are not oblivious to the high demand for affordable houses. Many are re-aligning offerings to attract those looking for a reasonable price tag.

 

VALUE GROWTH

Going by established economic theories, falling sales and inventory pile-up should lower prices. However, prices in most markets are either rising or stagnant.

While the price rise in most markets in the past one year has been close to inflation, most analysts expect better returns in the medium to long term (three and more years) going by the market's past performance.

 

RUPEE IMPACT

Property prices are impacted by inflation, which increases wages as well as cost of inputs such as steel and cement. According to an analysis by JLL, input costs have risen 7% this year. Last year, the rise was 25%. Thankfully, developers are refraining from passing on the burden to buyers due to already sluggish sales.

The rupee's recent fall against the US dollar cannot be ignored either. This has led to a rise in prices of imported inputs. On the positive side, developers and brokers say they are getting more enquiries from nonresident Indians (NRIs).



CONCLUSION:

While buying a house, one always faces the question whether it makes sense to wait for a price correction. The answer depends upon the aim. If one wants a house to live, financial advisors say one must go ahead immediately, as first home serves an asset and helps you save on house rent and income tax.

"There will never be a perfect market. As long as you are taking an informed decision, there is no point in delaying, because property prices in India are likely to rise," says Varma of PropTiger. We haven't reached that kind of peak where prices will collapse. Even if there is a collapse, it won't be across India.

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