As the pandemic peaked and economic activities ceased, many experts predicted that the real estate sector would be one of the last to recover from the shock. But now, it has surprised all with its performance after the pandemic.
Interestingly, it is the millennials who are driving the growth in this sector. This is mainly due to the realisation among them that owning a home is of utmost importance.
There is an increase in growth in disposable income, combined with government support through initiatives like housing for all; tax benefits, as well as reduction in property tax in cities like Mumbai, which are all contributing to millennials now becoming home owners.
Done right, a property gives one the dual benefit of assured return and growth in value, leading to the generation of unparalleled returns. This is why one should check off the following points to get the most of his/her home buying experience.
Location: Location matters a lot when it comes to investing in residential real estate. Many factors come into play here, including access to public transport, safety, proximity to one’s place of work or school, and other facilities, such as hospitals, malls, movie theatres, and more. When buying in an upcoming district outside the main city, other factors should also be considered, such as distance to neighbouring cities and infrastructure projects in the area. Investors should also carry out a thorough check of the property to get a better understanding of its potentials and liabilities.
Stage of development: Owning a house has become more valuable since the pandemic. As a result, there is an increased interest in properties in the remote areas, as work-from-home opportunities are readily available now. A rise in buyer interest in under-construction projects in these remote locations has also been observed. This is largely because such projects are more pocket-friendly, yield a higher return on investment (ROI), and comply with RERA regulations regarding fair trade practices. Alternatively, ready-to-move-in options provide easy possession and tax benefits. However, they tend to be more expensive. The construction quality of these units is often poor. Customers should weigh the pros and cons of both the options before making a decision.
Title and other property-related documents: An overall check of the documents is critical to establish the ownership of the property and avoid any disputes in future. It can help one gauge the amount of legal work required to finalise the sale deed. Buyers should be mindful of hidden charges and paperwork requirements, such as documents related to mortgage or ownership transfer. Sellers and brokers sometimes include these in the property documents and sale agreements. One should also note and negotiate any ambiguous fees, such as, local or statutory charges, impending repair charges, and insurance premiums, among others, before purchase.
Appreciation and resale value: Resale value is a crucial factor one should consider before investing in a property. Property prices do appreciate significantly with time, thereby ensuring healthy returns on the initial investment. However, homebuyers usually ignore this while making their decision. In situations like this, the main issues to consider are: Whether or not the property will appreciate more than the market, or what amount of the investment’s potential upside is already present in the current purchase price. These are particularly difficult to estimate when buying in an ‘up and coming’ neighbourhood, as opposed to a more established one. The amount of upside that has been priced into the purchase price is crucially important to assess and consider.
Finding the right developer: Before investing in a project, one should thoroughly examine a developer’s track record and financial credibility. Real estate transactions have been made safer by RERA, but it’s still best to deal with developers who are renowned in the local community. Millennial buyers should also make sure their shortlisted projects are approved by RERA, as well as listed on the appropriate website. It is also crucial to select a trustworthy brand, since these entities deliver on/before time, as well as offer better facilities. Also, they deliver homes with a touch of modern lifestyle.
Best offers on home loans: Most millennials are still in their early twenties and thirties, which means that they have fewer financial obligations in life. This implies that they can secure a home loan more readily. Additionally, this group also has the advantage of getting lower home loans at lower equated monthly instalments (EMIs) and a longer repayment period while obtaining housing finance. Getting a loan to buy your first house can also provide you with substantial tax benefits under Sections 80C and 24A of the Income Tax Act.
The author is managing director, Spenta Corporation.
(Disclaimer: Views expressed are the authors’ own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.)