The Indian real estate slump has brought a wishful thought to the fore, the buyers’ market. Across the built environment of real estate, there is a critical evaluation of opportunity cost as the transactions are few and far between. The reports of price correction are lending credence to the theory that the property market in general, and the housing market in particular, has completely taken a ‘U’ turn in favour of the home buyer.
Jagjeet Madhok, a prospective home buyer in Gurgaon, is extremely confident that real estate has turned out to be the buyers’ market. The secondary market property he’s interested in, has been reduced from Rs 9,900 per sq ft to Rs 9,200 per sq ft within just six months. Also, Madhok’s been informed that he can get an 8-10% lower deal in the primary market. “I have been told the developer has not reduced his market price. However, on a direct deal with him, he has offered to pass on the high brokerage fee directly to the buyer,” informs Madhok. “That is also a huge discount and no less than correction. This is like a dream offer; something that may not be there for long” he says.
So, has it become a buyers’ market?
There’s more to the buyers’ market than just price correction. Affordability is a big factor too, but equally important is the job market. Then come the inflation and interest rates. An ideal buyers’ market should reflect a combination of all these indicators.
“Any house that costs more than five years of gross income, is not affordable,” explains Pranay Vakil, chairman of Praron Consultancy. “Also, the EMI should not exceed 50% of the take-home salary. Based on this, most of the properties in major Indian cities are not affordable. So, the buyers’ market, is a myth.”
Do these market dynamics make it a buyers’ market? Definitely not now. The analysts are nevertheless debating whether this is the right time to buy a house. Devina Ghildial, managing director, RICS, South Asia, believes real estate values are governed by demand and supply. This may vary on a project-to-project basis. The projects that see good demand, normally do not see a price correction.
When it comes deciding on the right time, Ghildial advises that, “It’s when you feel that you are ready for the responsibility that comes along with buying a property. It is important to consider the objectives of buying a property. The more you know about your reasons, the more focused your search will be and the better you will be able to select one that meets your requirements.”
There has been an impression gaining ground that the market has turned out to be buyers’ market, leading to a fresh round of concerns about opportunity cost. For the end-user who needs a house for self-use, this may be an opportunity with some price correction. Albeit, it cannot be termed as a buyers’ market.
(The writer is CEO, Track2Realty)