Home is a very important part in every individual’s life. It needs to be fulfilled at least once in a lifetime. People struggle their heart out to get a home of their own. However, it is difficult to buy a home in any metro city in India. The prices are sky high and the purchasing power is very low. With the demonetization step by the government in the year 2016, there have been many changes in the economy. This has affected almost all the sectors including the real estate. The finance ministry has reduced the interest rates for home loans making it easier and cheaper for many home buyers as the homes have become cheaper.
Decline in Interest Rates
The interest rates for home loans have always been a cause of concern for the home buyer. The rates go high with every change in the interest rate. However, with the new move to reduce the interest rates, the already involved home loans have seen a reduction in the interest rate and this has reduced their EMI. Many have en-cashed this opportunity by topping up their payments and reducing either the Principle amount or by reducing their loan tenure. This move will impact the builders in a good way as they will get more customers. The final consumer will also benefit as they can now purchase the homes they always wished to purchase.
The Indian realty market is distributed into sectors. They can be categorized into luxury, affordable, and budget homes sectors. The luxury sector is out of reach for most home buyers as the rates for such properties are very high depending on the location and the amenities provided. Moreover, their maintenance costs are also high making the property even more expensive on a recurring basis. However, the affordable sector has maximum takers as this has all the basic amenities that a home buyer needs and in a decent location. The affordable sector is a great choice for the consumers and will benefit them. Also with the price reduction, this is the most booming sector in the real estate industry. Builders are now concentrating on getting their stock out so that maximum benefit can be availed from this situation.
Get the stocks rolling
With the price cut maximum builders and developers are eager to get their stocks cleared. This can be a beneficial move for the builders as well as the home buyers. Most of the unsold homes are in the affordable category and are because of the prices the builders are quoting for it. The unsold inventory causes a lot of cash crunch for the builders as they cannot start a new project sue to shortage of funds. In case if they do, it gets stopped in the way as the funds are not released from other projects to roll out the new ones. Banks do not fund the property completely even after loan approval and disbursement as they cannot complete the project on time due to such issues.
Builders are always on the receiving end when it comes to profits or losses as they have a higher risk involved in such a bargain. They have already put their money in the property and are waiting for the profits which are now reduced due to the demonetisation and the interest rate cut. This means that the profits decided for the property would not materialise as expected. But due to the market situations they would need to bend else the stocks would not move as expected. So, it is a win-win situation for the end user as they would not only get the house which they longed for enough but also at a reduced rate.
Whereas for the builders who have started their projects now it can be a good time, as the RERA rules apply to the new properties along with the Benami act which will reduce the black money as well. All these moves planned by the government are for the betterment of the consumer and it has started to show results by the reduced interest rates. So, wait no more and invest in your dream home with the price cut benefit. A home is a dream project for almost everyone and with this initiative; many will be able to fulfil the dream in the most affordable manner.