Is This The Right Time To Buy A House?
- Several reports have predicted that residential real estate prices may rise in 2022
- Prices may rise on the back of increasing demand for bigger houses
- Home loan interest rates are still at an all-time low
- Even if rates increase, as is being expected, it may take time to get translated
- Also, the interest rates will rise only gradually, so you can benefit from low rates for some time
The real estate industry has witnessed lower activity for quite some time. The Covid pandemic rendered another blow to the industry as it reeled under various shortages and lack of demand.
However, the pandemic also led a segment to buy bigger homes with better amenities as a lot of people moved to working from home. That may get another leg-up this year, with reports from real estate services predicting a rise in values during 2022.
Does that mean this is the right time for homebuyers to buy the house they have always been dreaming of?
Imminent Price Rise
According to a recent report by Knight Frank, a real estate services company, prices in the residential segment may go up to 5 per cent.
This price appreciation may be directly related to rising demand, especially for larger apartments. The trend of people eyeing bigger homes is still around, which is giving rise to more demand than earlier.
Data from another real estate firm, Square Yards, clearly shows that people want bigger homes, with demand for three-bedroom houses and other large formats going up in 2021.
Homebuyers sitting on the fence for some time are now seeking to enter the market with Covid-induced uncertainties going down. The current attractive pricing is just adding to the motivation to buy.
Low Interest Rates
Another reason that is attracting homebuyers are the low interest rates. It is expected that the interest rate cycle may reverse soon with the US Federal Reserve also indicating an upmove in the near future.
However, considering that home loan rates are at an all-time low and even if interest rates are hiked, they may take some time to translate, homebuyers will get low rates for some time to come.
However, it may be noted that the low interest rates may not last forever, considering that maximum home loans are now offered on floating interest rates linked to the Reserve Bank of India’s repo rate.
What Should You Do?
Buying a house is a personal decision if you want to live in it. Ideally, if you get a house that you love and have enough cash flow, it may be a good time to buy.
Investments in real estate, on the other hand, may not necessarily be a good idea, considering other costs, including registration and stamp duty, the interest you pay on the home loan, the maintenance cost you may have to bear in the future and liquidity concerns.
Disclaimer – ICICI Securities Ltd. ( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Venture House, Appasaheb Marathe Marg, Prabhadevi, Mumbai - 400 025, India, Tel No : 022 - 6807 7100. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. The contents herein above are solely for informational purpose and may not be used or considered as an offer document or solicitation of offer to buy or sell or subscribe for securities or other financial instruments or any other product. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.