Let me clear one thing at the start of the article that, particularly in this article I have focused on the people who want to buy property as a need, and not from the investment point of view. From last few months one can easily notice that Pune builders have started launching their new projects. Media has started pouring a feeling that the slowdown effect which was very strong during last one and half years to two years; has already diluted.
In fact Punekars has also started visiting newly launched sites and few old projects with a rejuvenated mind. Builders have started increasing their rates. Big AD campaigns everywhere .
But my dear friends - “ALL IS WELL????”
In last few weeks there are few fresh news of bankruptcies. Sensex is also not showing very good signs. Every dip in sen sex is pushing property shares further down as compared to other industries. If you carefully read the annual reports of all giants in real estate, one can easily make out that things are going not that well as portrayed. Any further bankruptcies may create a tsunami in markets. Now what the property buyer should do..???
I think there are few things which a probable buyer always should work on
1)Need : The need for the house is always there.
But as now there is a trend of nucleus family the need of the required space keeps changing after every five years.
For example a newly married couple initially may require just 600+ sq. ft that is one BHK. Considering the today’s pricing, it may fit to once budget. Five years down the line the same family may require 2 bhk of around 800 to 1000 sq. ft.
2)Appreciation of bought asset.:
This is the most important point. Because after five years as you want to shift from 1 bhk to 2 BHK , if your old buy has not enough appreciated buying second home may remain dream only.
3) Home Loan and galloping interest rates.
This is always a balancing act. “Salary will go high but installment going to remain same “ is an obsolete concept. We should always mark 5% OF OUR INCOME TO FIGHT WITH THIS PROBLEM.
Now if we consider this three basic check points with current market scenario ; and ask a question is this a right time to buy….? Lets check the answer with following points.
1) Is the growth of Pune going to stop ?
The answer is big no. Because of this growth factor the minimum to minimum property rate hikes per year will be in the range of 15% to 25%. Now if we consider the base minimum rate of any area of Pune is not less than Rs 2000/sq. ft. lets us consider the flat area as 600 sq. ft. So the all inclusive possession cost of that flat will be in tune of Rs 15 lacs. If we consider the loan amount as Rs 12.5 Lacs; the loan installment will be approx. Rs 11000/-
With considered growth rate the same property is going to cost you around Rs 22 to 23 Lacs in a span of five years. That means the loan installment will be approx. Rs 18500 to Rs 20000/- With current industry trends everything is growing except salary. I mean to say inflation ,medical expenses , school fees are growing at a spectacular rate.
Salary increments are normally in the range of 10 to 20 % range. Now pl answer yourself ; if you delay the decision now just because of any baseless rumor; will you be able to buy anything thereafter!!!!!
Locations:
When I say a rate of Rs 2000/- it already a outskirt of pune. May be because of the development that outskirt will come in PMC area. THIS MAY BE ALREADY AWAY FROM YOUR WORKPLACE. But after five years are you open to go further beyond the reach and invest/waste two to three hours daily just in traveling. In addition to that your address will be definitely not going to have a tag of Pune.
To support my statement lets take a case of flat at Bavdhan in 2003.
The to-days rate even after a slowdown are in the range of Rs 3000 toRs 3600/sq. ft.
Lets take a case of flat at Moshi/Bhosri. In June 2009 the rates per sq. ft were in the tune of Rs 1600 to Rs 1900/sq. ft. TODAY'S RATE IN THE SAME AREA ARE IN THE RANGE OF Rs 2000 to Rs 2600/sq. ft.
You can also check the status at Wagholi.
2) Fear of another market crash down/slowdown
Last slowdown has made a temporary impact(Lasts long for around 14 months) of 20% reduction in the prices.
But the homeloan and home is an asset to be scaled at the tenure of 15 years . Even if we consider two slowdowns in between ; is that really going to make a big difference..!!!
Sitting on the bank of river and giving an advice is always easy. But my dear friends it is your own call. So think …
Prasad Deshpande
punevastu@yahoo.com
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