Mumbai: If you are in the market to buy a house, the cost of property in National Capital Region (NCR), Chennai, Bangalore and Kolkata have declined. Weighted average price across tier I cities dipped marginally by 1% as compared with a year ago and a decrease of 3% was observed in NCR and Chennai, while Bangalore and Kolkata witnessed a 2% drop, according to a latest report by Liases Foras Real Estate Rating & Research Ltd, a real estate advisory firm.
Meanwhile, property prices remained constant in the Mumbai Metropolitan Region (MMR). However, prices of properties in Hyderabad, Ahmedabad and Pune saw an increase. In terms of sales, out of eight major cities, only NCR witnessed a decline in sales. Home sales in Delhi region fell by 17% to 13,279 units in the October-December quarter of 2018-2019.
According to the report, the various policy interventions at national level like the Real Estate (Regulation and Development) Act, 2016 (RERA) and Goods and Services Tax (GST) among others although led to some apprehensions initially, but clubbed with other interventions like increase in limit of size of flat for subsidy under Pradhan Mantri Awas Yojana (PMAY), extension of Credit Linked Subsidy Scheme (CLSS) for Middle Income Group (MIG) and others have definitely helped bringing back the confidence of both end users and developers in the industry.
Should you buy a property?
If you are looking to buy a house to live in it, then you may want to consider some basic parameters such as the builder’s track record, the cost and legalities. “If you are looking to buy a property for end use, you need to check the builder’s past deliverable records. Since there is a lot of ready inventory available you can consider buying ready-to-move-in houses and also save on GST. Here the execution risk gets nullified. Ensure that there is RERA registration,” said Pankaj Kapoor, managing director, Liases Foras, a real estate advisory firm.
If you are looking to buy a property for investment purposes, one of the barometers to measure is the rental yield. “If the rental yield is more than 3.5%, then you may want to consider it. The above 3.5% rental yield measure indicates the capital value of the property is likely to go up. Capital value of a property will have a downward pressure if it is below 3.5% rental yield,” said Kapoor.
Before buying the property do the basic calculation of the cost of the house, the cost of taking a home loan and other administrative charges attached to it. You also need to consider whether you would keep it for the long term. Once you are sure you can afford to buy it, only then considering investing. Also remember that a property is an illiquid asset.