Many think, I will anyway settle down in my home town after retirement so I shall manage living in rental premises.Though their argument is not wrong, they could wisely own a house in the city they are living with a bit of proper planning.
If you properly calculate the rent you are paying till your retirement, post retirement, tax savings you get on your investment, appreciation of the property, Plight of ownership, hassles from owner etc., you will feel that investing in a house is definitely better.
Which is better? Apartment or independent house? Clearly, Independent house is better if you can afford. The best part of this is you don’t have to share the land of your house. Unlike apartment, your land prices appreciate as years pass by. But the biggest problem in buying a land or independent house is whether the seller is genuine so due care should be taken by seeking advice from a layer before buying your dream property. Such incidents rarely happen in case of an apartment.
Now if your question is can I go ahead and buy? We would suggest you to buy a house if you feel your job is comparatively secure, you have adequate life insurance to dole out entire sum by your dependents in case of unfortunate event of death and the property prices correct at least 30% from its high. Price correction means that, if a property at a location with say 1500 sqft with good amenities was costing 50 Lakhs earlier, then the same property should now cost 35 Lakhs. But if a builder is offering a new apartment for 35 Lakhs, don’t you think that they have reduced prices since they advertised 30% discount. So now the challenge is whether the property he is selling would really cost you 50 lakhs in case the market wouldn’t have crashed? So how do you determine this? Your estimation should include the over all build, finishing, fittings, flooring, basic infrastructure for your apartment/house, location of the property, amenities, free parking lot, whether the property is inclusive of registration costs, whether there are any hidden costs, and last but not least carpet area of your apartment or villa.
One important thing we have to notice is property prices have not increased out of proportional in every place. So in case property prices at your place is steadily increasing say at the rate of 15% per annum, then with price correction seen now, you can go ahead and buy properties you wished to buy. But if your city has seen lot of increase in property prices then you have to wait till it corrects in such a way that it normalizes to a price increase of 15% per annum.
So, these real estate players have marginally compromised on the profits and are trying by all means to hold the price drop.
One thing we should understand is, it is difficult for any body to accept loss and that too if they have seen huge profits till then. So, these builders are trying by all means to convince consumers that they are selling properties at throw away prices. But the catch is these builders are not transparent in the offers.
How long and how many consumers can they attract with these offers? Not long and not many..! They are exploring all routes to some how hold these prices thinking that the consumers will get back to them. They don’t understand the meaning of healthy growth. Once all the routes are closed, they will have no option but to really reduce the prices by at least 30-40%. So when will it happen? It will happen slowly say by end of 2009 as the government and financial institutions are trying by all means to help this important sector.
Though many home buyers feel cheated for buying these homes at higher prices, they can have a sigh of relief due to interest rates cooling off thus easing their EMIs.
Investors have to keep in mind that if the rental income from that property they have invested is giving more returns than other investments then they can go for it.
What you need to check? Whether you are getting the same property you wanted for reduced price? This includes the over all build, finishing, basic infrastructure for your apartment/house, location of the property, amenities, free parking lot, inclusive of registration costs, hidden costs, and last but not least carpet area of your apartment or villa.