It’s a known fact that India’s property market has been going through big upheavals in recent times. Housing activity has slowed down considerably due to the liquidity crisis and unaffordability affecting both builders and homebuyers alike.
But there seems to be the hope of a revival with the slew of measures that the government has introduced. Beginning with propositions that aim to organise the highly fractured Indian real estate market to ones that bring relief to homebuyers and homeowners, the housing sector seems to be a good place to invest in right now.
Let’s take a look at some of the points that are in favour.
Bailing out the NBFCs
The National Housing Bank (NHB), the primary financial institution that oversees the housing sector, announced a Rs 10,000 crore liquidity injection for housing finance companies that have been struggling to find a footing. In the Union Budget for 2019, Finance Minister Nirmala Sitharaman outlined a plan wherein the government would bolster NBFCs by covering first losses up to 10%. Although for a limited period, this will bail out NBFCs from their current crisis and help them come out strong.
How will it help? By speeding up the completion of projects and completing deliveries to customers faster.
RBI rate cut
The RBI’s announcement of rate cuts in August brought good cheer all around as home loans immediately got cheaper. Repo rates now stand at 5.40%, the lowest it has been in the last five years. Banks have followed up by reducing their interest rates for home loans, which is a huge motivating factor for aspiring homebuyers.
How will this help? By clearing the backlog of inventory in cities.
MCLR vs RRLR
The latest mandate from the RBI specifies banks to link floating-rate loans to external benchmarks like the repo rate, which makes home loans considerably more attractive to homebuyers. With the repo rate going down, banks can now offer cheaper loans for buying homes and vehicles. While the mandate applies only to floating-rate loans, it will act as a significant stimulating force for a highly sluggish market.
How will this help? It will enable people to experience the double benefit of saving money through cheaper loans even as they make a property investment.
GST rate slashed
As part of the ‘Housing for All by 2022’ objective, the government slashed GST rates for projects under construction from 12% to 5%. It has also reduced GST to a marginal 1% for projects that fall under the affordable housing scheme.
How will this help? Lower tax rates will spark more enthusiasm among aspiring homebuyers in the affordable homes segment.
With housing prices remaining steady, investors find it an excellent option for wealth creation. It is a particularly enticing prospect for NRIs and High Net-worth Individuals (HNIs) who are always open to opportunities that allow them to park their hard-earned money safely for the future. For investors, it is all about getting a good return on their capital or having a steady income from rents, and there is no better time than now to make good on property investment.
Markets ready for appreciation
Any downturn is not going to last forever, and when it comes to the property market, it’s all about affordability.
“The banks will pass on all rate cuts to borrowers, which will result in existing home loan customers getting the benefit of lower rates. Government initiatives (like these) will ease the burden of homebuyers,” says Ashok Chhajer, Chairman and Managing Director, Arihant Superstructures Ltd.
Economical housing is enjoying its moment in the sun, and it is the perfect time to buy your dream home.