Is it a good time to buy property? It depends.
The coronavirus crisis has left the global economy reeling with financial markets in a free-fall, leaving lots of people who were in the market for a home with a valid question – is now really a good time to buy property? The answer – it depends.
Let’s examine some of the factors you should take into consideration before making a decision.
Evaluate your financial position
This is the most crucial factor you need to consider. For most people buying property is the biggest financial decision of their lifetime and requires proper long term financial planning.
Evaluate your financial position and plan accordingly – if you’re employed in a sector that is relatively stable and has reasonable job security, this is probably a good time to invest in real estate due to several reasons which we’ll go over below. If however, you’re scared about losing your job or business, then you could either put your plans on hold till the economy is more stable or you could consider investing in under-construction real estate with a reputed developer.
Under- construction property has a low entry barrier and a lower financial burden till the property is delivered – you only need to service the interest on the home loan and your EMI’s only start once you get possession.
Calculate how much your EMI burden will be and ensure that the EMI amount is one you can pay comfortably along with managing other expenses.
Consider the risks of the deal
Just like all shares in the stock market are not equal, all real estate transactions also are not equal. Consider the risks of the deal you are opting for.
The biggest factor to consider is developer reputation, portfolio and track record. The pandemic may cause further consolidation and smaller players are likely to crash out of the market. Make sure you opt for a developer with a solid track record, good reputation and a diversified portfolio. At Marathon, we have always been conservative and financially responsible and our diverse portfolio which spreads across the city and ranges from affordable to luxury and includes categories of retail, commercial and residential stands us in good stead to emerge from the crisis. A lot of smaller companies with fewer projects or less diversified portfolios may not be as fortunate.
Under-construction vs ready
Under-construction properties are riskier than ready properties and some ongoing projects may face delays due to the lockdown or due to disruption of labour and supply chains or other factors. RERA does safeguard the interests of under-construction home buyers, but ready property will always be a safer option.
Marathon Nexzone at Panvel offers both ready and under-construction flats. Explore Marathon’s portfolio of ready or near-ready properties
However, under-construction property also has several other advantages
Smaller initial investment – with ready property 100% of the property value needs to be paid and EMI’s start from day 1. With under-construction you can book a home with as less as 5% of the property value and full EMI’s will only start after delivery. This reduces your initial outlay and also reduces risk in case the economy takes longer to recover.
Better prices – Under-construction properties are typically cheaper than ready properties.
While making this decision consider several factors like builder reputation, track record, and whether the project is RERA registered.
Should you wait and watch?
Right now prices are undergoing a correction and developers are already passing on benefits to customers. But a valid question is, will prices fall further, and if so, should I wait and watch? To address this concern, some developers are offering price protection to clients to guarantee that they get a good price on their deal. Marathon has a price protection plan to safeguard your investment. Get in touch with us to learn more
New launches are also expected to be put on hold, so supply will drastically reduce – this will keep prices from dropping drastically. Ready property especially will see greater demand and prices are unlikely to reduce significantly in this category. Another category which is unlikely to see any major price correction is the affordable housing category of under Rs. 1 Cr in Mumbai as the margins on such projects are already low, leaving developers with not much room to reduce prices further.
Good deals on offer, but protect your investment
With the havoc caused by the pandemic, developers are offering great deals on properties right now, making it a buyers market. Marathon is also offering price protection currently – which means that in the worst case of prices falling further in the next 3 months, the benefits will be passed on to customers who book right now. In short, customers who book now are guaranteed the best price for a 3-month window.
Get in touch with us to learn more about our offers on our projects across the city.
Low interest rates
Home loan interest rates are extremely attractive right now. The RBI slashed the repo rate by 0.75% recently and SBI is passing on the entire rate cut to most borrowers.
SBI interest rates now start from as low as 7.2%. You can learn more about home loans being cheaper and how that impacts you here.
Good time for investors
If you’re in the market as an investor, this is great time to buy property – developers are offering great deals, interest rates are low, and real estate amongst the safest investment options now – the financial markets are too risky and volatile at the moment. If you’re an NRI, this is probably one of the best times to invest in real estate in India. Read our article on why NRI’s are likely to flock to Indian real estate.
If you’ve managed to avoid the worst of the stock market crash and have funds that need to be redeployed to other asset classes, real estate is worth considering.
Marathon Group has properties across the city at some of the fastest appreciating markets like Panvel. Explore our projects.
Create a real asset
Real estate is a real, tangible asset with inherent utility, value and stability. Unlike stocks or mutual funds, which are more sensitive to externalities and have no inherent value, a real estate investment becomes the home you live in! It’s where you spend the most time with your family. Real estate can also generate a steady stream of income in the form of rentals, and while it’s not as liquid as shares, can still be liquidated relatively easily. Moreover in a city like Mumbai real estate has invariably appreciated due to the severe scarcity of land.
Real estate also helps create family wealth which can be passed on to future generations. Factor in the intangibles like freedom from the hassles of landlords and rents and the relief and pride that comes from owning the home you live in (a feeling that has been reinforced for many by being confined to their homes during the lockdown!) and real estate emerges as a sensible investment option.
“I’ve created most of my wealth by investing smartly in real estate. I’ve managed to increase the value of my investment by 4-5x in a decade by buying property with the right builder, at the right location, at the right time”
S. Ramkrishna, Former President, Mahindra Group
In summary, if you have financial stability, it may be a good time to purchase a home.