Is It A Good Time To Buy A Home, During The COVID-19 Pandemic?

As the COVID-19 pandemic brings economies around the world to a standstill, stock traders are making the most of it, in the bear market. Similarly, there could be a hidden opportunity for real estate investors, who are seeking options to earn future returns. However, considering the large quantum of investment involved in a tangible asset such as property, is it ok to take some risk for uncertain returns?

*Home loan rates are at their lowest

The Reserve Bank of India has announced a cut in the Repo Rate and Reverse Repo Rate, which will bring down home loan interest rates, as most of the banks have launched repo-rate linked home loan products. The RBI has also cut the mandatory liquidity requirement for banks and this could result in banks lending more vigorously. For those who have sufficient cash to invest, this could be the perfect time to strike a deal and to get your home loan approved. However, the disbursement will only happen, once the lockdown ends.  

*Possible negotiations

Builders and property agents are desperate to clear their inventory stock, to generate liquidity and resume cash-flows. Some builders are also offering refundable booking amounts, to lure homebuyers. A number of subvention schemes are available in the market, which require investors to pay 10% on booking and the remaining at the time of possession.

*Property prices might not increase, post-lockdown

Real estate demand has dried down, because of a cash-strapped economy and new constructions have stalled, due to the lack of construction workers, supply shortage and the lockdown. The demand-supply slowdown will spillover for several weeks, even when the lockdown is lifted.

According to Niranjan Hiranandani, national president NAREDCO and co-founder and managing director, Hiranandani Group, “If construction slows down to a crawl once the lockdown is over, we may see ready possession homes attracting a premium.”

*Project delays are unavoidable

Industry experts foresee delays in the delivery of real estate projects, with the construction material supply chain being broken. “Given the COVID-19 crisis, construction in incomplete projects has come to a complete standstill across the country. We foresee a delay in delivery of projects, on account of supply disruption, due to the virus outbreak and liquidity crunch,” says Jaxay Shah, chairman, CREDAI National.

*Uncertain economic growth

At present, India along with other major economies is staring at job crises, unemployment and an economic slowdown, which could push many companies into bankruptcy. This is certainly not a good sign for a versatile economy like India, which has a large number of small and medium enterprises. While the RBI has promised to announce more financial packages for different sectors, only time will tell what future holds for all of us.

 Post-lockdown scenario: What to expect?

“Those living in rented accommodation have realised the safety and security of living in one’s own house. This segment is expected to make the transition from ‘fence-sitters’ to ‘actual buyers’ at the earliest,” adds Hiranandani. This means millennial buyers who averted the idea of investing in their own home, will consider investing in one.

Experts further add that the real estate sector has the most optimal graph, as far as secured investments are concerned. Today, we are all confined to our homes and safe, thus, realising the importance of housing and investing in the same - be it a small house or a bungalow.

With so many ifs and buts, it is up to you, to ascertain how well you are placed financially and whether you ready to take a risk that is big, to earn future returns that seem uncertain, at present.