India has seen both the rise and fall of real estate prices in its history. With the increase in population and people migrating to different cities for work, the hunt for houses has been on a high. It was just recently when the slump came in the real estate market.
What Is Happening?
While more and more people are showing interest in buying and investing in property, property prices are hitting an all-time low. Many people have had the belief that investing in real estate is a sure shot way to get back returns with profit when needed. However, this has not been the case for many people.
The Cities Affected
According to a recent report by the National Housing Bank, some cities have seen a growth in their property prices. And some cities have witnessed the slump. Cities like Mumbai and Bengaluru have had a rise of at least 7.50% and 5.75% between months July to September in the year 2017. Whereas, Delhi, the capital city itself hit a low of .07% within the same time frame.
Another significant city hard hit by the slouch in real estate would be Chennai. Chennai has witnessed a tremendous outpour of population. The increase is due to the rise in job availabilities and opportunities. Thus, the need for people to search for houses has also increased. Due to high demand, the prices of buying real estate property is high, which leads people to look for better alternatives. The next best option for purchasing property is taking it on rent.
Why Renting Property Could Be An Option
Taking a house or shop on rent in Chennai is a lucrative idea because:
(A).firstly it gets you a tax deduction on the rent paid,
(B). Secondly, it is a safe and suitable option for those who have jobs which are likely to get them transfers often.
The flexibility of having the opportunity to leave the rented space to suit your circumstances is an added benefit.
Not just houses, people are also now more in favor of renting commercial properties.
With more people shifting towards renting commercial property in Chennai, it has made people think as to why people are opting for this option. Just like while looking for a house, a businessperson would also look for a spot where he/she can have a shop where he can yield maximum profits. Shop rent in Chennai is affordable for businessmen, which makes it much better than buying a new shop.
There are various areas where there are shops for rent in Chennai. Places like Alwarthirunagar, Medavakkam, Triplicane, Royapettah have multiple options for renting shops. The rental price in these areas ranges from between 8,000 to a whopping 40,000. However, having a shop on rent in a prime location can boost your business. Also, with a lease that is suitable for you as well, it can be a win-win situation.
These days buying property means blocking your money in booking the property. Adding to that if you take a home loan, then you have to take care of many things. Apart from paying the interest, which can be quite high, you also have to take care of the furnishing and maintenance of the property. Whereas, with a rented property, if you work out a proper lease with your landlord, you can end up saving money and have more mobility.
Looking at the statistics provided by most realtors, the prices of real estate in India will continue to see a downfall this year. The slow economy is a significant reason for this. There has been a rise in non-performing loans, and buyers are also facing a liquidity crisis.
The major setback has come from the dwindling numbers of home loans, which used to be a significant source of buying property for most people. With buyers not having the same liquidity which they used to, repaying of loans is becoming a problem, which is the cause for the blocking or stopping of most property projects.
Another reason for the falling prices of the real estate market is the slowing down of projects. Builders are not able to complete and deliver flats on time to the buyers. This is leading to cancellations of bookings and also has hampered the trust people had in new companies and investors.
The Reserve Bank of India released an All India House Price Index. According to this, the profits in house prices had remarkably slowed down in the last two years.
There does not seem to be any good news shortly as well. We can expect a further fall in the National house prices by 2.0% and expect an increment of only 1.3% this year.
To stimulate this sludge, the Government of India has come up with various schemes, but nothing seems to be working for now. A considerable cut in the tax which was charged on the sale of residential properties which are under construction was announced.
However, this has failed to do the trick. According to various property analysts, the elections have also caused a significant dent in the slack in real estate. Most of the money which invested real estate by many parties has been withdrawn for powerful and aggressive campaigning.
With many places having overpriced property, the national capital might see a further slowdown in the real estate market. However, according to reports, there might be a positive trend form cities like Bengaluru and Chennai this year. This could improve the current situation in these cities.
The Stepping Back of Investors
Investors would be very interested in putting their money in real estate, but now they have stepped back. The nonfinancial companies which had to start funding developers have also stopped now due to the NBFC crises. Hence the real estate market has been seeing roadblocks from all directions.
We hope that the coming future comes with a better economy and liquidity for everyone. This will help real estate, which is a promising field for those interested and still be a reachable and profitable deal for those who want to buy a property of their own.