One year of lockdown: Are you still dithering over buying your dream home?

Owing to the coronavirus-induced disruptions, the real estate landscape has convulsed dramatically over the preceding 12 months and has now evolved to a unique juxtaposition. Thanks to 15- year lows in home loan rates and the humongous unsold inventory in properties, there exists today an enormous opportunity for home buyers. After a lull in 2020, housing loans grew at 7.7% in January 2021.

RBI has acknowledged the moderate deceleration of home loans in the first half of 2020. Things began to change in October 2020, when builders and lenders announced fee waivers and discounts on new purchases as festive offers, following the systematic unlocking of economic activity.

The central bank continued to underpin the path for financial recovery by holding historically lowest ever policy rates. Thus, amidst pandemic, and especially after 6 months of moratorium, home loans have turned out to be the safest bets for lenders. No wonder, top banks such as State Bank of India and ICICI Bank crossed their milestones in home loan portfolios at Rs 5 trillion and Rs 2 trillion in February 2021 and November 2020, respectively.

Almost after a year of working from home and being locked down within the fences of walls for so many months, coupled with Covid-induced life’s uncertainties, the desire to own your own home has been vigorously re-ignited. This new found interest has led consumers to actively scout for their first home, or simply a larger abode.

Attractive interest rates

In the past 12 months, we have witnessed a complete overhaul of lending rates. Home Loan Interest Rates are available at 6.65% p.a. Most borrowers can qualify for rates around 7% p.a. These are not only the lowest ever rates, but come with a further 0.05% concession for female borrowers. Furthermore, there is a CLSS subsidy for first-time home owners, and additional tax benefits u/s 80C & 24. Overall, the benefits of locking up a home loan deal today are greater than at any time in recent memory.

Correction in property prices

Unsold housing inventory in top eight cities is a monumental 7.18 lakh units as on December 31, 2020. The average unsold inventory overhang was found to be 47 months as of December 2020, substantially higher than 27 months in December 2019. The numbers explained why property prices have been largely stagnant for past few years. Finally to beat COVID blues, industry woke up to price corrections, i.e. 5-20%. Low pricing in realty and decadal lows in interest rates have contributed to improved consumer confidence and is reflected in an uptick in transactions.

Flood of offers

Besides placing the lowest rates on the platter, lenders have also waived off processing fees, reduced margins, and introduced special concessions for select customers. The cash-starved builders on the other hand are also keen to offload their inventories with special offers and benefits. So dream homes are up for grabs.

Government reforms

In support of housing sales, governments of Delhi, Maharashtra and Karnataka have already cut down stamp duties, leaving more liquidity in the pockets of customers. Additionally, there has been a reduction in TDS rates, on Pan-India basis. The slew of government-aided steps have enhanced the allure of completing a real estate transaction. Importantly, RERA is a huge step in the right direction and safeguards buyers’ interests in the best possible manner.

Covid-19 has been the quintessential ‘black swan’ event, but every cloud has a silver lining. A fortunate fall-out of the pandemic has been competitive property prices and low rates of interest.

If you are contemplating acquisition of your dream home, now is the best time.

(The writer is founder and Managing Director, My Money Mantra. Views expressed are personal)