Prices Down, Interest Rate down Time you bought a House!

Following the RBI’s signal in its quarterly policy to soften the interest rate regime on Wednesday, and the coming into force of a RERA in every state and UT, buying a house is going to be cheaper and safer, now on

Is it the right time to buy?

Property prices have fallen by over around 15-20% from the peak rates o f 2013-2014, when the home loan interest rate easy at 10.5-11%. Adjusting fall in prices and interest rates, down to around 8.40% in the last three years, the net price fall is over 30%

1. The price at which a flat is available now in the market is lower than even the replacement cost
2. Because of this, launches of new projects in the first half of 2017 declined to around a quarter of that in first half of 2016. For last one year, till June 2017, new launches have declined to less than one third of that in the preceding year, as shown in the chart.
3. Waiting for prices to fall further could be risky, as the shortage in supply may start pushing prices up.

What about interest rates?

Interest rates, especially home loan rates, are set to fall further in the next couple of year.

Home loan rates have already fallen by around three percentage points in the last five years.

Since 2014, only home loan rates have fallen by over 2 percentage points, to 8.40%. Thus, EMI on 20-year loan is down by 19.5% since 2012, and down by 14% since 2014.

Why rates may dip further:

1. RBI cut the policy rate by a quarter of a percentage point, indicating the direction of interest rates to follow in the near future.
2. The banking system is saddled with surplus liquidity. Total deposits with the banks in the last one year increased by Rs 10,32,900 crore-by the last week of july-against Rs 7,89,580 crore in the same period the preceding year. But banks lent only Rs 4,40500 cror this year. Agaisns Rs 6,22,40 crore last year. Because of this banks have to park surplus funds with RBI at very low rate.
3. Banks like SBI have cut the savings rate to 3.5%, from 4%. Other banks will also follow suit. This will reduce the cost of funds.
4. Besides lowering policy rates, RBI has also asked banks to pass on the benefit to bowers by reducing lending rates.
5. As the home loan segment has the lowest default rates, banks are more inclined to lowr home loan rates and lend aggressively to deploy their funds.
6. With RERA in place, banks are more confident in linding against a project under construction.
7. Borrow at adjustable interest rates, so that you can take the benefit of any fall in interest rate in future.

Risk down in the RERA regime

Around 1,000 current projects have registrered with UP, Haryana, and Rajasthan RERAs, which will monitor developers and ensute timely dlivery and the quality of construction.

Al the projects have disclosed the size of the apartments, the facilities incorporated, nd the timeline of delivery.

A buyers must check for RERA registration of a project before buying a flat, apart from the usual checks on the track record of its developers.

Many call it an extension of Dwarka while others term it as the beginning of Dwarka Expressway. Sectors adjoining Delhi on Dwarka Expressway are surely the preferred choice for homebuyers.