Moneycontrol
Last Updated : | Source: Housing.com/news

3 factors that can boost the market during the festive period

The festive season is when people usually loosen their purse strings as this is an auspicious time to buy a home. Usually, this means a windfall for developers. But with the property market in R

The festive season is when people usually loosen their purse strings as this is an auspicious time to buy a home. Usually, this means a windfall for developers. But with the property market in a trough, is there any reason for optimism?

Realtors list 3 key factors that drive the performance of the property market during a festive period – inventory, interest rates and offers.

“The realty sector has been moving at a slow pace for the last three years, which is why it is facing high unsold inventory. Reasons range from new policies being implemented, to property prices, delays in approval processes and a funds crunch,” says Manju Yagnik, Vice-Chairperson, Nahar Group.

Inventory: Yagnik says these developments have shaken the trust of home buyers, who have heard and read about delays in projects being handed over. “Today, home buyers are hesitant to buy in an under-construction property as they are not sure whether the project will be completed,” she says. That’s why ready homes are looking more attractive than ever.

Interest Rates: Tempting interest rates on home loans are the second reason realtors are expecting to do brisk business. Interest rates have declined significantly since last year’s festive period and developers are expecting festive rate cuts by banks. If the Reserve Bank of India obliges, sentiment will get a boost.

Attractive Offers: The third key driver is offers and discounts from developers. Developers are sitting on huge inventory and, to attract buyers, the offers would have to be bigger than ever.

“Generally, developers extend a host of offers during the festive season. However, real estate is a capital-intensive investment and should be based on thorough market research. Offers should not be the sole reason one invests one’s life’s savings in a project. The house you are buying should serve the purpose of investment,” suggests Surabhi Arora, senior associate director, Research, Colliers India.

See also: Should you trust all festive offers and discounts?

Other factors that will influence sentiment in the realty market Recent changes in regulations like the implementation of the Real Estate Regulatory Bill, GST, Benami Transaction Prohibition Act and land digitisation are also buoying sentiment. All these legislations will introduce transparency and accountability in the real estate sector. If the 7th Pay Commission is implemented on time, demand is bound to rise. With a number of start-ups scouting for commercial space, the return on investment in the realty market has gone up in many cities.

The government has also announced guidelines for ease of doing business, REITs, easing of FDI investment norms, affordable housing and tax incentives for home buyers. REIT will hopefully play an important role in providing small investors an opportunity to invest in large-scale commercial and residential real estate projects, which would otherwise have not be possible. The major benefit would be improved property market transparency, smoothening volatile property cycles and potentially lowering the cost of capital.

Ramesh Ranganathan, business head (Residential, West and North), Mahindra Lifespaces, says a strong emerging trend includes:

Customers’ preference for developers based on reputation. Prior track record of delivery. Integrity and financial standing.

As the home buying environment evolves, aspects such as quality of construction, proactive customer communication on project status, and timely project development are increasingly emerging as key deciding factors, Ranganathan reveals.

By: Housing.com/news


You can now invest in mutual funds with moneycontrol. Download moneycontrol transact app. A dedicated app to explore, research and buy mutual funds.
First Published on Oct 12, 2016 12:12 pm
More From
Loading...
Sections
Follow us on
Available On
PCI DSS Compliant