When is the right time to buy a property? NOW!

Wishes to the readers for the 2021-2022 festive season! With the festive season, there is always an aspiration to invest in/buy a property. But, often times-we ask this question to ourselves – “when is the right time”-the answer is-“it is NOW”

Let us see why –

This is the right time to invest in real estate. Due to the decline in the number of homes that have not sold much in the last few years, it is a good option for buyers to invest in ready-to-move flats without waiting for new projects to arrive in a timely manner. As RERA assures on time delivery, project transparency and accountability, there is already a lot of positivity in this area. All information related to the project is available to the public for information, from the current phase of the project, the permissions obtained or pending by the developer. This gives customers who invest their hard earned money in real estate security.

The real estate market ecosystem in Indian real estate is very good now as the economy is showing signs of recovery which will motivate buyers to buy new houses. In the meantime, it’s important for developers to market their projects well. It is also important to make sure that there are no flaws or omissions in the advertisement. Because if so, customers are more likely to go away than be attracted.

This season is very important in India and it contributes a lot to the economic transactions in the market. Buying a home should be one of the momentous events of your life. Home purchases are expected to be promising and good this year due to rising demand for housing. The festive season will see a bright spot in the property market as prices have also been stable for some time, giving buyers a good time to plan their investments. Today’s market is very stable for buyers, options are available, so this is a good time to invest in a home.

PRICE RISE?

Residential property prices are projected to rise 10-15% as builders seek to counter rising costs, according to the surveys conducted and research papers. Prices of construction raw materials, such as cement and steel, have been steadily rising, causing concern among developers. To put things in perspective – here is a list of percentage increase in cost for the following materials which are essential to Real Estate sector

  1. Cement – 34%
  2. RMC – Ready Mix Concrete – 21%
  3. Steel – 52%
  4. Crushed Sand – 25%
  5. Aluminum – 65%
  6. Fly Ash Bricks – 17%
  7. AAC Blocks – Autoclaved Aerated Concrete Blocks – 15%
  8. GI Pipe – Galvanized Iron Pipe – 53%
  9. Laminate – 51%

The above list is indicative enough to understand the overall price rise in the materials needed for the sector and the eventuality of a price rise. There have been cases where most of the real estate developers are cutting margins to absorb these rising costs but that is not sustainable for a long time.

Due to the festive spirit, residential real estate sales in major cities outperformed sales during the same period in the pre-Covid years. Historically, as the price of fuel climbs consistently, prices of practically all materials and commodities rise as well, and prices of construction raw materials have been steadily rising since January 2020.

The abnormal spike in building materials costs has compelled the developers to either delay awarding the trade packages like, plumbing, Fire electricals in anticipation that prices shall normalize, which in turn is affecting the delivery timeline of the projects.

Developers point out that this is a multidimensional issue because RERA limits the ability to increase the selling price even if building expenses rise dramatically.

Pricing is under extreme pressure since most developers are running on razor-thin margins in the current market. After assessing the input costs, it may and will be necessary to raise the price. Add to that construction delays caused by lockdowns and labor scarcity, which has resulted in increased labor costs, leading to a 10% to 15% increase in construction costs in the last 18 months.

The government may also consider either allowing input tax credit for real estate projects and/or rationalizing GST on various construction raw materials from their current rates, as this would immediately bring down the prices of residential properties.

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