Planning to buy a house? It's perhaps the best time to do so in the last decade or so after demonetisation adversely affected property prices .
Here's why home buying seems a good proposition now.
Housing prices fell by 1.67 per cent to Rs 6,185 per sq ft in Q4 (January- March) from Rs 6,290 per sq ft in the December quarter in major cities such as Gurugram, Noida, Mumbai, Kolkata, Hyderabad, Bengaluru, Pune and Chennai. "Overall the fall in demand and new launches of residential projects slowed down in Q1 as impact of demonetisation on the real estate sector tapered down faster than the expectations," PropEquity said in a report.
- Income growth during the last three years has crossed housing prices and affordability in the current fiscal is the best since 2005, according to a CLSA report cited in an article in The Indian Express.
- Housing loan rates are at their 12-year lows, after falling 150 bps in the last two years increasing the affordability of buying a house. According to an observation by CLSA, every 100 basis points mortgage rate cut is equal to 5-6 per cent price cut.
- Off late, real estate prices in metro cities have remained flat. For instance, price of a mass-premium quality house located in a metro city suburb having a ticket price of Rs 60 lakh has remained flat on a year-on-year basis, the CLSA report states.
- The post-tax household income has increased by 7.5 per cent year-on-year, in FY18 to Rs 13 lakh per annum even as the loan-to-value ratio (LTV) is at 70 per cent, and the mortgage rate at 8.5 per cent. This led to a significant increase in the affordability than in the past.
- The BJP govt accorded infrastructure status to affordable housing in Budget 2017 which would enable developers operating in this segment to raise loans at a cheaper rate, akin to other infrastructure projects. The builders in turn would be able transfer the benefits of cheaper loans to the first-time home buyers, who would get them at cheaper rates.
- Earlier the subsidy on home loan interest was available to only those earning up to Rs 6 lakh per annum. Under the extension of income slabs for giving subsidy to first-time home buyers, the government announced two new slabs in Budget 2017. The new slabs apply to loans with tenure of up to 20 years against the limit of 15 years currently. The subsidy has been extended to those in the income slab up to Rs 12 lakh per annum and Rs 18 lakh per annum. Now, people earning up to Rs 12 lakh per annum will get interest subsidy of 4 percentage points on a principal amount of Rs 9 lakh. Those earning up to Rs 18 lakh per annum will be given a subsidy of 3 percentage points on a principal component of Rs 12 lakh.