The residential real estate sector in India is going through a period of relative stress. Regulatory uncertainty has been lowering the velocity of transactions. Stagnant prices and falling sales perhaps indicate that the real estate sector is not doing as well as it should be.
The excitement of owning your dream house urges people to speed up the buying process. But all the paperwork you need to do can be a laborious task, and often annoying. The most common dilemma is whether you should buy an under-construction property or a ready-to-move-in one.
Investors, stakeholders and developers think that the housing sector will recover from its stagnant phase, and that most cities will see recovering property prices. Housing is a basic need, and the growing demand for housing has kept the faith alive in developers and investors. Because of the growing demand, the focus of developers has shifted from commercial to residential properties.
The continuous rise in property prices over many decades – in many cases faster than increase in incomes – resulted in homes starting to become unaffordable across major cities. This has led to a situation where demand had slowed down and unaffordability, product mismatch and the lack of market confidence among potential homebuyers, has led to lower demand in the residential housing segment. Homebuyers do not feel confident enough to buy. One of the main reasons is that the construction of under construction properties is usually delayed for long. There is another reason that makes homebuyers a wait little more – the expectation that property prices will fall.
A ready-to-move in house allows the possessor to move in instantly. This saves the buyer from the uncertainty of delays and the dual burden of paying the rent and EMIs at the same time. But, fully constructed flats are more expensive. Due to high demand, these flats or apartments are highly priced when compared to projects that are under construction. Ready-to-move-in apartments also do not offer many flexible payments schemes.
There are several reasons behind such an emerging trend. The most important reason is the possibility of getting stuck into a double whammy – of paying EMIs after booking an under-construction house at a high cost, while paying rent for the home where they stay at the same time.
When a buyer purchases a home with bank loans, it is costly for them to keep paying EMIs as well as the rentals till the developers complete their project and hand over the house keys. Paying a little bit extra to acquire a house right away is cheaper than paying rentals over a long period of time, because that is an additional cost for the buyer.
Developers tend to construct houses for every kind of homebuyer. Depending on their preference, homebuyers choose. It’s no secret that ready-to-possess projects or those nearing completion are costlier than under-construction projects. However, there are many buyers who are not willing to wait and are eager to acquire property as quickly as possible.
Those who are averse to any kind of risk prefer to buy ready-to-move in houses. However, there have also been cases where authorities have demolished buildings for illegal construction, after it is completed. Such cases are rare, but can’t be overlooked.
It is a good deal to invest in ready-to-move-in project
Over the past few years, the real estate sector has gone through stagnancy, resulting in lesser launches, a decline in prices and higher unsold inventories. This has inspired developers to offer attractive deals, discounts and freebies to attract buyers of ready-to-move properties. Undoubtedly, for homebuyers, it makes sense to invest in a ready-for-possession project rather than wait for a new project to come up over in the future.
Buyers pay a premium for a good location
Homebuyers still struggle to find a location for their dream home. Currently, developers focus on the location first because constructing a project in a less demanding location would not be profitable. Building a housing project in a location that buyers prefer is convenient. It is also the key to be ahead of other developers.