Will Ganesha bring cheer to real estate?
Several policy changes being unveiled by the government in the recent past, have significantly impacted the real estate sector. We look at the long-term prospects for the property market and whether the festive season beginning with Ganesh Chaturthi, can usher in better days for home buyers
It is a common belief that making property investments on auspicious days, like Ganesh Chaturthi, will lead to appreciation in the value of the asset. Moreover, buying a property often involves one’s life savings. This year, one has high expectations from Vighnaharta (Ganpati), to bring festive cheer to the real estate market. Developers are optimistic that despite the slowdown, the market will pick up later. They cite the recent policy changes to substantiate this belief.
How policy changes will affect the festive season
The Goods and Services Tax (GST), for example, will change the market, slowly, although it is still early days to comment on its impact, says Parth Mehta, managing director of Paradigm Realty.
“Auspicious days like Ganesh Chaturthi or Diwali, always bring the much-needed cheer to the market. So, from the developers’ perspective, we do expect a good turnout. From a buyer’s point of view, there are a few good things which are happening in the real estate industry. Once the Real Estate (Regulation and Development Act (RERA) is completely implemented, we will get better results from the industry. The recent price corrections offer more reasons to buy. We hope Ganesha bestows stability on the real estate market,” adds Mehta.
Shailesh Puranik, MD of Puranik Builders, concurs that reforms such as the GST, demonetisation and implementation of the RERA, have slowed down the real estate sector to an extent. “There are short-term setbacks with these reforms but the long-term benefits are far greater. While the government’s reforms have hampered growth, positive decisions of the RBI like reduction of interest rates, have been huge boons for the sector. Lower interest rates and greater trust in a project, because of the introduction of RERA, will be major drivers to bring home seekers back into the fold,” Puranik maintains.
Real estate sentiments on Ganesh Chaturthi
Owing to demonetisation, RERA and GST, almost 90 per cent of home seekers put their decisions on hold, points out Aniket Haware, managing director of Haware Builders. “Now, the ambiguity is over. Consequently, home buyers will now proceed and freeze their decisions, this season. Home loan interest rates are going down and we now have a regulator to keep an eye on the sector and the GST has also come into the picture. With things stabilising, sentiments are also improving. In India, if the time of investment coincides with a festival or auspicious time, then, it is like icing on a cake. The sentiment of home buyers towards property purchase, is generally high during the festive season, beginning with Ganesh Chaturthi,” explains Haware.
Developers are also trying to lure buyers with innovative offers during the festive season. “As developers, we also believe that auspicious time plays a vital role. So, we line up new launches and offers during this time,” elaborates Haware. Puranik Builders, on its part, has a ‘Monsoon Bonanza’ offer, which promotes zero down payment at the time of booking, along with zero effect of GST on prices. “The positive sentiment in the market is growing and the industry is set to see much better days ahead,” feels Puranik.s
The market for affordable homes
Surabhi Arora, senior associate director, research, Colliers International India, predicts that the market will pick up, owing to an increase in the number of transactions in the festive season, especially during Ganesh Chaturthi in the west and Navaratri in NCR. “Developers generally dole out a lot of festive offers, from gold coins to international holidays. However, this festive season, the buyers will pay more heed to RERA registration, rather than any other free offer. Buyers are likely to consider ready-to-move properties or projects that are nearing completion and that too, smaller units. The real estate market is in a recovery mode. The government subsidy on interest rates under the Credit Linked Subsidy Scheme, should boost affordable housing. Some banks have introduced new home loan schemes, which offer flexibility in interest moratorium and principal repayments. These schemes are aimed at the young working professionals from urban areas,” Arora elaborates.
Market demand, now, is for affordable homes, i.e., 1-BHK units. Ready-to-move-in homes are likely to fetch good prices, due to greater demand, adds Haware. “The market for luxury homes will also pick up but not as much as affordable homes. There is a lot of inventory still in the market and developers are not launching new projects. Home buyers also stand to get GST benefits, on ready properties. So, affordable housing and ready-to-move-in will be the preferred choices, this Ganesh Chaturthi,” sums up Haware.
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