Home Ownership: Buy or Wait?
There is no sector that is safe from the economic downturn imposed by the Covid-19 Pandemic of 2020. The normal relationship between supply and demand has been upended and businesses have had to completely change their operating perspectives. These are dubious times for both the buyer and the seller.
It is surprising then that most market experts feel that this is a very good time to be in the market for a house. The reason why home buyers are in a positive space is because they are at an unprecedented advantage to negotiate favourable deals on home options. Even more interesting, home buyers are looking at interest rates of 7.15% to 7.8% on home loans which is an all-time-low.
There are multiple factors at play here when considering this change. For one, there has been a mass exodus of construction projects across India. Many construction sites are empty simply because labour forces are either scared for their safety or have returned to their native residences. Secondly, of the 6.4 lakh apartments in the top 7 Indian cities, only 12% can be classified as ready to move in. This means that even large-scale apartment constructions have a long way to go before being fully ready.
The labour factor is failing for certain firms because of poor working conditions that have been prevalent for decades in India. Simply put, labourers are not paid even close to an appreciable amount for them to risk their health. The problem with independent contractors and vendors is a propagation of dated money-saving tactics which leaves with a workforce that is neither loyal nor motivated. The government understands this and is looking strongly into enforcing minimum standards for every construction labourer. Noting the devastating effect of the gaps in the construction chain, various state governments are also mulling over e-registration of construction documents and contracts cutting out the middleman entirely.
But the factor that every home buyer has to consider is where they stand in terms of capital. According to a survey done by ANAROCK Construction, roughly 40% of people who were prepared to go for their own property in January 2020 do not intend to start on those plans this year after the Covid19 Pandemic. There are many reasons that affect this decision but the strongest one is no doubt the complete lack of financial security. Many people who fall into this 40% have no source of income because of lay-offs, company closures and business debts. These people have unfortunately been on the receiving end of an economic crisis. These people were also focusing on getting their own home on the backs of home loans which in January 2020 did not have the attractive interest rates they do now.
But what of the other 60%? Well these comprise of people who had saved up capital for their home construction projects before commencing them. Those with saved capital are not banking on home loans and thus have a lesser requirement for a constant flow of income to finance their projects. This category no doubt has a strong advantage as now they are looking at substantially lower rates and they have a very strong ground for re-negotiations. It is understandable why they would want to continue with their plans as they are neither affected by an economic crises nor high construction rates.
Over 75% of prospective homeowners in India have suffered from offline property dealings and searches. Now with the pandemic forcing businesses to look at online options for their operations and catalogue, there is a paradigm shift for the construction sector around the corner. More firms are looking into technological strengthening and making a more robust online presence. These changes are applauded by the government as well with a prospect of online registrations of property documents. This would help bring back the value chain and make the concept of your own house not just affordable but convenient as well.
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