Property prices have either remained stagnant or have corrected during the last 5-7 years, both in the primary as well as the secondary markets. Besides, home loan interest rates are at historic lows, making this a good time to buy property, especially for end-users.
Given that real estate is a heterogeneous product, each property commands its own value, based on location, size, quality of construction, design, age, direction and so on. Even in the same apartment tower, prices may differ based on the floor, the views that each house offers and so on. Therefore price discovery becomes a difficult task for a buyer, especially while buying in the resale market.
Also read: Why the best time to buy a house is now
However, there are many ways through which a buyer can discover the correct market value of a property.
Check prices on web portals: This is the easiest way to start your research. Check out the prices of other properties similar to the one that you may have short-listed. “The listed prices tell you what others are asking for a property similar to yours,” says E. Jayashree Kurup, Head Content and Advisory, Magicbricks. Realty portals also have charts that show average price movement of property in a locality over the years. They also have tools and apps to help buyers find the worth of a particular house, by providing a few details. For instance, Magicbricks.com’s PropWorth app helps people calculate the price of a property in a few minutes.
Also read: Tired of paying rent? Answer these four questions before buying a house
Consult property brokers: Real estate agents have the best understanding of the property value in the area they operate in. Visit a few agents who are working in that area for quite some time. “It is a good idea to pose as a seller and see what they quote to you, and then again, as a buyer. Now, you have to tally the values with other parameters on which the price of the individual unit depends,” explains Jayashree.
Mani Rangarajan, Group COO, Housing.com, Makaan.com & PropTiger.com, adds, “While prevalent circle rates in the area are a definitive benchmark to understanding the pricing, a look at the transaction value of similar properties in the same location is a fairly good benchmark for gauging the property value one intends to buy.”
Approach property valuers: There are professional, government-approved property valuers available for a fee who do the necessary research for you. They check similar properties in the same locality, the current condition of the property being appraised, its neighbourhood, and more to arrive at an almost accurate evaluation of your house or property. Typically, their fee starts from Rs 5,000 and goes up depending up on the price of the property and other factors. These days, many realty portals also offer the services of a valuer for a nominal fee.
Ask family members and friends: Just to get an informal feel of what the area looks like. They might just know more than what a mere market survey tells. For instance, they might tell you more about the building’s history, its inhabitants, why the flat has been put on sale, any drawbacks and so on.
If you are intended to take things in your hand, here’s a look at some factors that have a deep impact on property prices in general.
Neighbourhood and house size
Locality and layout are major considerations. Premium neighbourhoods can command a 10-30 percent higher value for their properties.
The price of a property is also dependent on its size and configuration. Size is important to compute the per square feet value. Properties built before the Real Estate Regulatory Authority rules came, still quote prices in terms of super built-up areas. Make sure you know the price in terms of the exact square feet of usable area.
Properties of similar sizes may have different configurations. For instance, a 1500 sq. ft property of 2 BHK and a 1500 sq. ft of 3 BHK would have different values. This depends on which configuration is in demand in the locality and city.
The direction that your home faces
The direction in which the house faces also determines the value of the property. East and West-facing units with sunshine coming into the house are popular in India. Vaastu compliance is a big driver of property values across South India and parts of West India, as are water and power back-up facilities.
Problems of seepage and plumbing issues always pull down property values, even though lower floors command a premium in North India. In fact, cities such as Mumbai charge a premium for upper floors because of the sea view, breeze, and a peaceful environment.
Access to facilities
Amenities such as walkways, security networks, club houses and sports and recreational facilities influence home rates. Access and proximity to essential services such as schools, hospitals, entertainment and shopping centres push up property values. Proximity to, and connectivity with, commercial and entertainment hubs also pushes up property values, as does a Metro Station in the vicinity. However, traffic bottlenecks near the property can bring down property values
Buying a new house in a locality is easier as the facilities are relatively more transparently laid out and so are the prices. But buying a property in the resale market can get tricky. Here, you need to rely on multiple resources and need to do some digging around to know the house’s reasonable value. Use a combination of online tools, professional help, and some research to arrive at a fair market price.