Why should you buy a house now?

Buying a property is one of the top life goals for most people. Real estate is one of the popular investment options. Commercial properties are usually bought for investment purposes, while people generally have an emotional connection when it comes to buying a residential property. Moreover, buying a house has become necessary with increasing disposable income and evolving lifestyle needs. However, one of the most common questions buyers face is whether to buy a property now or wait for the right time.

Several factors influence decisions regarding property purchases, including the buyer’s financial situation, home loan interest rates, market conditions, and so on. By analysing these factors, one can determine whether it is the best time to buy a house. In this article, we share some top reasons why this may be the right time to purchase a property.

Buying a house may get costlier in future

Property prices in India have significantly surged in recent years, driven by various factors, including increased demand, lower interest rates and infrastructure developments like metro and expressway projects. Moreover, land is a limited resource, and the price is expected to rise as demand due to the burgeoning population increases. With metro cities becoming saturated, buying property in these cities has nearly become unaffordable.  Given the growing demand for properties, the prices are expected to go up. Hence, the sooner one invests, the better.

According to the latest Housing.com Research report, the average prices of residential properties have seen growth during the April-June 2024 quarter. The report mentioned that there has been a sharp rise in property values which has impacted the supply of affordable homes across markets with the share of homes priced up to Rs 45 lakh registering a major decline in the past couple of quarters.

Further, home loan interest will get costlier when lenders increase the interest rates. Typically, when RBI increases the repo rate, banks pass on the borrowing costs to the consumers by increasing the interest rates.

Availability of quality inventory

Builders across cities in India are coming up with new projects to meet the evolving needs of modern homebuyers. There is a significant amount of quality inventory in projects launched by reputed developers, especially of ready-to-move-in homes. One should note that the inventory availability varies based on the demand and other factors. In particular, the ready-to-move-in homes may last for a limited time, given the demand. Thus, the earlier one decides to purchase, the better the chances of buying their dream home. 

Further, there is a noticeable shift towards premium and luxury homes among affluent buyers, while affordable housing remains the preferred choice for a major segment of buyers in India.

The Indian real estate sector is going through its growth phase, especially after the pandemic, with property demand surging across major cities and even in tier-2 markets. With developers catering to this growing demand, the market conditions are favourable for investment.

Inflation and economic factors

According to a report by the ministry of statistics and programme implementation, there is a sharp decline in the Year-on-year inflation rate based on the All India Consumer Price Index (CPI) number for July 2024, which is the lowest in the last 59 months.

Inflation is a key factor that impacts the cost of everything from household goods to housing and determines people’s purchasing power. Inflation influences the home loan rates, property prices and even the cost of construction. Further, this can also impact the rental rates as people will continue to rent instead of buying a property, thus pushing rental rates up.

However, compared to other investments like stocks, property as an asset class responds positively with an increase in values as inflation moves up. Hence, this is a crucial factor that impact property purchase decisions in India.

Lower interest rates

The Reserve Bank of India’s (RBI) recently decided to keep the repo rate unchanged at 6.5% for the ninth consecutive time. The repo rate is the interest rate at which the RBI lends funds to banks. Thus, it is an important factor that can influence property purchase decisions since it affects the EMIs paid by the borrower. According to industry experts, this move to keep repo rate unchanged will provide relief to homebuyers who have invested in properties while further boosting the sector’s growth.  

Home loan benefits for property buyers

Opting for home loans is a popular option to finance a house purchase. Home loan tenures can go up to 20 to 30 years, so the earlier you start, the better. Besides, lending institutions consider various factors, such as the borrower’s income and age when processing home loan applications. Applying for a home loan when you are younger will put you in a more advantageous position compared to when you apply for loans in your 50s to near-retirement age. Furthermore, you can consider applying for a joint home loan to reduce the burden of paying huge EMIs.

Taxation benefits for property owners

In addition to this, getting a home loan for property buying comes with taxation benefits. Home loan applicants get tax deductions up to Rs 1.5 lakh on principal repayment under Section 80C and tax deductions up to Rs 2 lakh on the interest paid under Section 24 (b) of the Income Tax Act. One can get a higher tax benefit with a joint home loan and tax deductions on stamp duty and registration charges.

Moreover, several state governments provide stamp duty rebates for female property buyers. Further, in the recent Budget announcement for 2024-25, the government has urged states to consider offering lower stamp duty rates for properties for women buyers.

Take advantage of property price appreciation

Real estate is one of the most secure investment options with the scope for higher returns in the future. Price appreciation of properties is based on numerous factors such as location, infrastructure development, demand and supply, etc. Thus, as the property market continues to grow, it is a wise idea invest today to earn significant returns on investment (ROI) in the coming years.

RERA regulations to protect buyers’ interest

After the RERA was implemented in 2016, the real estate sector has seen significant changes, creating more confidence among homebuyers. RERA lays down rules to safeguard homebuyers’ interests. Before the implementation of RERA, buyers used to face challenges with developers delaying the projects and some of them engaging in fraudulent activities. However, with a regulatory authority, there is greater transparency in operations and increased developer accountability towards the buyers. The implementation of RERA aims to ensure long-term sustainability in the sector by ensuring the timely completion of projects, which is expected to attract more investments.

Favourable policies by the government

Besides implementing RERA, the government introduced the Goods and Services Tax (GST) to bring uniformity in tax rates and structure, reducing the overall tax burden for people. Earlier, the cost incurred by the various, before GST, would be transferred to the buyers.

Further, the Indian government has made efforts to promote affordable housing with schemes such as the Pradhan Mantri Awas Yojana (PMAY). The Credit Linked Subsidy Scheme (CLSS) under PMAY provides subsidies on home loans for people from different income brackets.

These factors ensure a favourable time for those planning to buy their dream home.

Benefits of property buying over renting

While property buying comes with the initial cost of down payments and regular EMIs, it is an affordable choice in the long run. This is especially true considering the high rental rates across cities, especially metropolitan cities. Moreover, owning a property gives a sense of security and benefits in terms of higher resale value or rentals. The downside of staying on rent includes the lack of freedom to modify or upgrade the property, rising rent, etc. For many people, buying a house and servicing home loans is much more convenient than paying high rent.  

Housing.com News Viewpoint

Whether you are planning to buy a house for end use or investment purposes, there are several benefits you can look forward to, including lower home loan interest rates and plenty of property options. Moreover, homeownership in India is seen as a legacy and a long-term investment that fetches sound returns, ensuring a secure future for your family. So, if you have a steady income and can keep aside 40%-50% of your salary towards EMIs, then it is the best time to purchase a property.

Finally, a prospective homebuyer must know that the best time to purchase a house is when they are financially ready. Sometimes, timing your purchase with favourable market conditions can be difficult. So, you must choose to buy when you have found your dream home and can afford it.

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