The current pandemic has changed the meaning of a home for many. A home is now the office, gym, hangout place, and even the movie theatres or the lounge. This covid-19 crisis locked the human race indoors and thus people want more room for themselves in their own house. As per some reports, the demand for 3 BHKs and 2BHK+study has significantly increased in the last few months. However, buying a new house is a big decision, especially when the economy is sluggish. So, if you want to buy one, you need to evaluate a lot of factors.
Is it the right time to buy a house?
If you are wondering if this is the right time to buy a house or not, then this is the right time. Since the market is sluggish, the income of people has fallen, and unemployment has risen, the real estate prices are at an all-time low. However, in the last quarter, there has been some surge in the market and as the demand started picking up but you still have time to purchase your dream home at a lower price. If you want to buy a house but you are waiting for the market to revive, then you may end up paying a higher price for the same house which you can buy at a lower price now.
In the first quarter of 2021 and the last and third quarter of 2020, the demand already started picking up slowly. The main three reasons behind the demand being increasing amidst this crisis are –
- The interest rates are at an all-time low as RBI reduced the Repo rate to 4% in 2020 only. So, the overall interest rate has decreased so is for the home loans. You can avail of home loans even at 6.9%.
- The second reason is the prices of houses dropped drastically in the last few years even before the pandemic hit the world as the real estate market was very sluggish for the last few years. However, this price drop helped many prospective buyers to buy new homes. The prices are lower than before and though it is increasing now, the rise is slow. As per RBI, the home price index in the third quarter of 2020 fell by 1% and then grew by only 1.2% in the next quarter. So, the net growth was a mere 0.2%.
- The final reason for the demand rise is the incentives. Many developers are offering discounts, and then no installments till delivery of the apartments and other schemes.
Buying a home is a kind of investment, an investment for the future and the basic rule of investing is you buy when the prices are low and sell when the prices are high. So, it is not only a good time to buy your house but probably one of the best times for prospective home buyers.
Things to check when taking a loan
When you are thinking of buying a home, financing options need to be evaluated as soon as possible. Since the rates are already at an all-time low, you can get a good deal. The lower rate of interest means the EMI would be lower too and that would reduce the financial burden in the future as well.
Apart from the interest rate, check whether the processing fees are high or not. Whether there is home loan insurance included or not. Tenure is also an important aspect and you should consider factors such as age, income, and other financial goals while choosing tenure. A good credit score can help you get lower interest rate, therefore keep tabs on your credit score. Then if the lender provides doorstep services for the loan or not and other services.
Future of real estate market
Real Estate Sector is expected to contribute 13% to India’s GDP by 2025. Though the real estate market was a little slow in the past few years the road ahead seems smoother. With investments coming in the sector from institutional investors as well, the sector is anticipated to grow and reach $1 trillion by the year 2030. (Source: www.ibef.org)
From the Government to the private equity investors, all are focusing on this sector at present. The low interest rate is another major factor of growth in demand for residential projects even in this covid-19 crisis.
Buying a home is a dream for many and this pandemic has taught everyone the value of having a home of your own. Though buying is expensive if you want to buy a home for yourself, this is the best time you can have. With the subdued prices of the houses and the lower interest rate, what else do you need to go house hunting!