In the first quarter of 2016, there was six-fold increase in launch of affordable housing projects, as developers predicted greater demand in this highly price-sensitive segment. For the last 3-4 years, residential real estate market has seen sluggish demand, causing unsold inventory levels to go up in some key Indian geographies. One way or other, factors have now transpired to make residential real estate a buyer’s market. Buyers now have options, flexible rates and attractive payment plans.
From developers’ point of view, this has resulted in:
- Price correction in many markets in order to improve sales velocity of unsold products
- Increased project launches with right configurations to cater to existing demand
Advantages of a Buyer’s Market
As inventory increases, real estate prices usually drop but even if they don’t, negotiation power goes up. Some realtors refuse to understand the realities of a slow market and will not accept any offers less than what they feel they should get. If a buyer feels he is not getting the best possible deal, he should be confident enough to walk away and look at the next option on the list.
Remember, in a buyers’ market, the buyer has the power.
- If the home has been on the market for several weeks or months and has already undergone some price reductions, it suggests the seller is hoping to sell it at the earliest. Ask the seller for add-ons like additional furniture or fixtures as well as discount on listed price.
- Some brokers may be inclined to knock a percentage point off their commissions and pass on the benefit to the buyer to close deals. However, buyers will benefit if they look at property consultancies that don’t charge any brokerage from buyers at all, but only from sellers.
- Prospective buyers have a ‘problem of plenty’. Look at select projects by reputed developers – eliminate anonymous smaller players from the list. Don’t get lured by discounts and flexible payment plans. Base your choice on developer’s reputation, track record, project construction activity at site and location advantages of the project.
Guidelines for buyers
- In case of under-construction projects, buyers should consider those which are likely to be completed over the next 12-18 months.
- Going with developers who have a healthy track record of delivery will mitigate the risks related to timely delivery.
- Essential to undertake good diligence in terms of the project’s market response and inventory sold, which will ensure that project is delivered.
- One should look only at established housing corridors where social and physical infrastructure are in place or visibly under development.
