Buying a home
The changing economic landscape has also made loans cheaper and borrowing more attractive for buyers
Many of you would have seen Khosla Ka Ghosla, which hit the screens about a decade ago chronicling the journey of how Mr. Khosla gets his long cherished house after several bottlenecks. Perhaps, the film was inspirational for the government of the day to finally think up of establishing a regulator to legalise the housing sector. Since time immemorial, the most wanting desire of Indians has been the ownership of one’s house. There is plenty to read about from mythology and various films over the decades recording the great Indian dream of owning a house, to the extent that in certain communities marriages are arranged only if the groom has a house of his own.
Cut to 2017, the real estate landscape has changed drastically from the times of Kishan Khurana, the portly broker portrayed by the affable Boman Irani in the movie. Today, the real estate sector is in shambles. If you drive out into the two big residential hubs of NCR—Noida and Gurugram, you will encounter several ghost developments with incomplete structures and vacant plots. The story is similar in other metros too. The real sufferer—the buyer who took advantage of low interest rates and tax breaks on home loans to plunge into borrowing for that dream home. Many, in fact borrowed to fund a slightly bigger house than they could afford, because the EMIs looked convenient to repay. Today, many buyer groups are collectively fighting the builder lobby to hand over their promised homes. Several cases are registered in consumer courts and legal battles are being fought.
There has been a change among the buyers too. The number of speculators and those looking to invest in real estate has gone down. Real buyers are looking to buy a ready-to move in house than wait for a project to get completed and be simultaneously penalised with EMIs and rents. The big change that is making developers and builders fear the law is the implementation of the Real Estate Regulations and Development Act (RERA). The introduction of regulator has finally made real estate look less murky. What has aided this change in scenario is also to do with the government push towards ‘Housing for All by 2022’ and the push towards affordable housing. Suddenly, the same builders are talking a different language and are actually maintaining their delivery schedules. The changing economic landscape has also made loans cheaper and borrowing more attractive for buyers, especially in the lower and middle-income group. The Pay Commission payout is also a factor which is creating demand for homes and overall any momentum in this sector is welcome for greater economic revival.
The impact of demonetisation, GST, and RERA are still being factored in by the real estate sector, but the collective impact of these three events in quick succession has somewhat also created a clean image of the sector from its otherwise murky past. When housing picks up, several allied segments of the economy gets a boost—cement, construction, white goods, paints, and other allied elements benefit. As people start settling in new colonies, the infrastructure development around it by way of education institutions and markets further impact the economic green shoots. The unorganised segment of the economy also finds employment and it all works well.
We are at the cusp of what could emerge into a different era for the real estate sector. If over the next five years, the government actually manages to achieve its aim of creating housing for all, the need for fresh homes will diminish immensely. The already changing shared economy is disrupting several segments —the hotel industry is impacted after Air BnB, as much as the taxi-business with app-based cab hailing. Chances are the perennial rent vs buy debate will take a different turn by 2022, when the craze for a second home will may automatically vanish.
Already, alternate vehicles exist which allow you to invest into real estate. These are pure investments wherein the concept of unitised ownership exists, you don’t have to overtly worry about liquidity or other perils associated with real estate investing with such investments. However, if you are looking for that first home or a house to live; the time is right to take the plunge.