5 Reasons Why it’s The Best Time to Invest in Real Estate
18 May, 2018, 12:57 PM
If there’s one piece of sage advice that has been ingrained into us from time immemorial, it’s that property is the best investment, and rightfully so. Buying a home or property marks an important milestone in one’s life, and can provide the owner with passive income and prove to be a great long-term investment with big returns. While there are many factors that can affect the prices of property, now is a very lucrative time to invest in it. Let’s take a look at 5 reasons why it’s the best time to invest in real estate:
1. Low interest rates
Home loan takers can rejoice as home loan rates have plunged to an all time low, the lowest in the past 6 years. Since 2015, the RBI has cut the repo rate by a total of 175 basis points and the benefits are slowly trickling down. The demonetization in November 2016 left banks and NBFCs with an influx of cash, enabling them to offer attractive interests rates on loans. The low interest rates allows considerable savings in EMI costs; allowing people to avail low-cost home finance and become the proud owner of a property or home.
2. Flexible margins
As a down payment, lenders usually require 10-20% of the home’s purchase rate. The rest of the 80-90% is financed by the lender and includes registration, stamp duty and transfer charges. In April 2016, marginal cost of funds based lending rate (MLCR) was introduced for all loans, including home loans, allowing flexible margins. The interest rates given by the bank for deposits and the repo rate are decisive factors in calculating MLCR. Replacing the base rate system that initially existed, MLCR is an internal benchmark or reference rate for the bank.
3. Scheme Benefits
In an attempt to make housing affordable and available to all, the government announced the Pradhan Mantri Awas Yojna (PMAY) scheme to assist middle income groups (MIG) in buying/building property. Through this scheme, the benefit of interest subsidy of about 2.60 lakhs can be availed on home loans and will be available till March 2019. This scheme is against the home loan of the beneficiary and the subsidy amount will be credited upfront and will reduce the outstanding principle amount of the loan. With PMAY, the home loan borrower can opt for lower EMIs or repay the loan faster with original EMI.
To make transactions between the buyer and seller of properties equitable and fair, the Real Estate (Regulation and Development) Act (RERA) came into being. This act ensures that citizens can now get information and choose suitable real estate without worrying about the project execution and with recourse to complaints and suitable action against defaulting developers or agents. Buyers will also get real-time updates about the projects, litigations against promoters and RERA provides citizens with a platform to voice grievances and lodge complaints. Along with customer satisfaction, the transparency brought about with this act will enable buyers to make an informed decision regarding the purchase and investment in real estate.
5. Market Insights
Bengaluru has grown to become a leading start-up hub in the country with a total funding of 6 billion dollars. In 2017, 25,000 units were launched, 20,000 units were delivered and more than 1,30,000 units are under construction. With an array of units, prospective buyers are spoilt for choice and have a variety of homes to choose from. Office sectors are expected to attract high demand in the near future and the prices have never been better. However, this will not be the case for too long as there is steady growth in sales and prices are bound to pick up the pace.
If you’ve been patiently waiting for the right time to buy real-estate, now is the time to seize the opportunity to enjoy the benefits of your investment.