– by Siva Krishnan
The festive season is here again and the market is ripe for all prospective homebuyers, who plan to enter the market this season. Developers are cashing in on this spirit to revive sales, disrupted by factors such as demonetization, economic slowdown, and introduction of GST & RERA, among others. Add to that, the NBFC crisis which resulted in a liquidity squeeze.
Several developers across the country are doling out discounts and freebies to offload their unsold units. Typically, it is expected that the market will witness a significant jump in sales during the festive season that starts from the beginning of Ganesh Chaturthi celebrations and goes beyond Diwali.
So what’s on offer for homebuyers?
Discounts: Cash discounts are undoubtedly one of the most lucrative deals on offer. These discounts are offered on the per sq ft price. For example on the brochure rate of Rs 4,000 per square feet, a cash discount of Rs 200 is offered. For a 1,000 sq ft apartment, this results in a discount of Rs 2 lakh.
Freebies galore: Developers have also come out with a host of assured freebies on every flat booking. These could be in the form of white goods like air conditioners or a complete, modular kitchen and other home appliances like television or furniture and so on. Assured gifts can also include gold coins, iPhones, a foreign trip and a club membership.
GST waiver: Developers are also offering GST waivers on purchases. Currently, the GST is five percent for residential units outside the affordable housing segment. At the time of registration, the buyer has to pay stamp duty plus registration charges. While stamp duty varies from three percent to 10 percent depending on the state, registration charges are 1.1 percent if the property is worth over Rs 25 lakh. Along with GST, many developers are also waiving off stamp duty and registration charges, which means further savings for the buyer.
What can buyers do?
It is in one’s best interest to understand that this market is a buyer’s market. Not only are developers offering deals and discounts, but buyers are also in a position bargain hard and gain significantly. There are other factors that favor home buyers. Falling interest rates and huge supply of affordable and mid-income housing across top cities make it a perfect time to buy a property.
Amidst the current market scenario, buyers can get a further discount of 15-20 percent on the marketed price; in certain cases, discounts have touched the level of 30 percent!
However, if one is being offered a freebie that he already owns or one does not need, he can ask for discounts basis the MRP or the cost of the offering. If suppose, the developer has offered air conditioners in all two rooms and a hall of a two-bedroom apartment, you can always bargain on reducing another lakh from the total outgo during the deal and not take those air conditioners. But be sure to get a fix on how these freebies translate into a monetary benefit.
But understand the market situation well
There has been a slump in the market. Huge unsold inventory has forced firms to not increase their rates. As a result, prices have remained range-bound. With fewer launches, the market is ready for homebuyers willing to take the buying decision. The unsold inventory during the first nine months (July-September) of 2019 was 444,673 units, registering a small drop as compared to the corresponding period in 2018. While there has been a revival of sorts in sales since 2018, developers are still not out of the woods.
Coming to 2019, the new supply in the market has been limited. In addition to fewer new launches, the share of mid and affordable housing segments has increased beyond 50% in the country. Developers are therefore focused on delivering their existing projects. Hence, cautious buyers can now look at the market.
But there is a silver lining. The recent stimulus by the government in the form of a Rs 20,000 crore stress fund for the sector and the removal of Minimum Alternate Tax have bolstered the cause of creating more economic zones and promote affordable housing. Implementation of RERA ensures timely completion. In this light, while ready-to-move-in properties are the safest best, picking up property in one of the under-construction projects can also be a better choice. The reforms and policy initiatives so far indicate that the market is likely to see more deliveries in the near future. So choose wisely, bargain hard!