Anuj Puri, Chairman – ANAROCK Property Consultants

After zeroing on a property, buyers need to identify a suitable home loan lender to fulfil their financial needs.

Officially, there are two major lenders in the market – banks (including both public and private banks) and the housing finance companies (HFCs).

To get the best deal, a buyer must select a lender depending on their prevailing interest rates, eligibility criteria, processing fee and other factors.

Both banks and HFCs have their own pros and cons. Here are some advice and guidelines for taking a home loan in India.

Banks vs HFCs: Which is the better option?

Declaring an outright ‘winner’ among the two options is indeed difficult. Earlier, the steep interest rates of HFCs gave banks an edge.

However, now there is a parity between the two as most HFCs offer loans at rates within 8.6%-11.2%, while banks offer loans at 8.3%-10.5%. The gap has significantly reduced and buyers may now consider either option.

Eligibility criteria & process:

Rising NPAs over the past years have compelled banks to follow stricter norms for lending.

Anuj Puri, Chairman – ANAROCK Property Consultants

  • Nearly 60% of women home seekers prefer a property within the budget-range of INR 80 lakh; 52% will opt for ready-to-move-in homes
  • Women homebuyers benefit from lower stamp duty charges, low home loan interest rates, and tax deductions
  • Women must now mandatory be either co-owners or sole owners of affordable homes.

There’s a famous saying – the hand that rocks the cradle rules the world. This is so apt today, as women are excelling across sectors and increasingly making their mark in a male-dominated world.

The 21st-century millennial woman is progressive and increasingly financially independent. This had led to a distinct shift in her investment preferences – where gold and fixed deposits were the primary choices for Indian women, real estate now rides high in her investment portfolio.

In fact, in ANAROCK’s consumer sentiment survey, nearly 20% of participants were women. Among the many highlights of this survey – nearly 42% of women respondents preferred real estate as an investment asset class, followed by 30% for FDs and a mere 17% for gold.

Anuj Puri, Chairman – ANAROCK Property Consultants

No discussion about Mumbai’s notoriously land-starved real estate market is complete without mentioning the massive tracts of land held by various Government and non-Government agencies and bodies.

Arguably, Mumbai Port Trust (MbPT) is currently one of the largest landowners in the country’s otherwise land-scarce financial capital.

Mumbai Port Trust owns nearly 1,900 acres of commercially useable prime land in South and South-Central Mumbai along the sea-facing eastern coast. If put to good use, this large tract of land can help considerably in solving the city’s immense housing shortage.

Initially either oblivious or indifferent to its real worth, the port authorities have now realized that they sit on a veritable goldmine that can fetch massive capital. However, it is definitely not as easy as it may appear since many are now trying to capitalize on this precious land.

Some existing lessees are refusing to vacate the leased premises – even post expiry of their lease period of 100 years – or even allow the rentals to be hiked to match the current market rates. Others are engaged in long-drawn court cases commissioned by either party.

Anuj Puri, Chairman – ANAROCK Property Consultants

The slash in GST rates to 5% without ITC from the previous 12% with ITC for premium homes, and to 1% minus ITC for affordable homes from the earlier 8%, gives the beleaguered realty sector the much-needed breathing room and will certainly help it maintain some forward momentum in 2019.

Another booster shot given by the government is changing the very definition of the budget-range of affordable housing.

Extending the definition to housing priced within INR 45 lakh is credible. It will make more properties from the premium budget fall into the affordable segment category, and thus benefit buyers in cities like MMR where property prices are exorbitant.

Yet again, the affordable segment has got a major push today and buyers of this segment will benefit immensely. This will certainly cause sales of housing units within this segment to rise to a significant extent. Most players currently have considerable unsold stock within this segment.

ANAROCK data confirms that there are as many as 5.88 lakh under-construction homes lying unsold in the top 7 cities. Of these, 34% are priced below INR 40 lakh alone.

Anuj Puri, Chairman – ANAROCK Property Consultants

The keenly-awaited meeting of the Goods and Services Tax (GST) Council, which was supposed to deliver a final decision on the differential tax rates on real estate yesterday, hopes to reach a consensus on the 24th.

This is a critical matter and the outcome will have a notable impact on real estate market sentiment.

The levying of 5% GST (without the benefit of input tax credit or ITC) can help boost homebuyers’ favourable disposition towards making a purchase decision.

While it may not trigger the kind of massive housing sales which the industry sorely needs, it can make a difference.

The crux of the matter is the relative merits and demerits of two propositions – a flat 5% GST without ITC or a higher GST with ITC.

If the Government decides on 5% GST without ITC, here are the impacts on different industry stakeholders:

GST Impact On Home Buyers

Lowering the GST rate can definitely provide a short-term boost for fence-sitting homebuyers to make purchase decisions.

Anuj Puri, Chairman – ANAROCK Property Consultants

  • A new Government with a clear majority raised optimism in 2014
  • Nearly 5.45 lakh units launched in the year and nearly 3.43 lakh units sold – the previous year saw the launch of approx. 4.6 lakh units and lower sales
  • Long-term benefits of recent reforms will accrue only with the continuity of their enforcement by this or the next Government

During an impending general election, real estate stakeholders conjecture about their likely impact on the real estate market.

Conventionally, the period between the announcement of the election date until the final result day is a period marked by caution and hesitancy in the overall real estate market.

While investors generally refrain from making market plays in this waiting period, buyers may also adopt a wait-and-watch stance.

The reasons can vary from anticipation that a newly-elected Government may offer more sops to homebuyers to the hope that a re-elected Government may reward voters with such sops.

In this period, developers understandably prefer to focus on selling their unsold stock rather than launching new projects.

Anuj Puri, Chairman – ANAROCK Property Consultants

  • GST rate cut or not, GST-exempt ready-to-move draws maximum sales
  • Of the total unsold stock of 6.73 lakh units in the top 7 cities, only 13% are ready-to-move-in
  • Of 5.88 lakh unsold under-construction units, 20% to be completed in 2019 – the addition of 1.16 lakh RTM units
  • Can a marginal tax saving on overpriced properties trigger sentiment revival in delay-tainted under construction segment?

The recent interim budget announced fresh sops for the Indian real estate sector – which, on closer scrutiny, did not really send clear revival signals to the market at all. Now, the strident demand for lowering GST rates on under-construction properties is on the table.

In fact, the prime minister and finance minister have proactively assured that they are considering this collective demand from the industry positively. Will a GST cut infuse enough positive sentiment to help the languishing real estate sector revive?

Perhaps, rather than debating whether a GST cut will do the trick, we should ask ourselves whether it would actually solve the ‘real’ problems the sector is facing.

Anuj Puri, Chairman – ANAROCK Property Consultants

The doomsayers are having a field day with predicting that Brexit will cause the UK real estate market to dry up and blow away. In India, we are quite used to gleeful prophecies of doom regarding real estate and take them with a healthy pinch of salt.

No doubt, every change involves disruption and confusion in the beginning. In the case of Brexit, the magnitude of change is undoubtedly massive considering the sheer size and also the diversity of the involved countries.

It is not only their economies which will be affected – like in every death or divorce, there will also be grief. Grief is an emotion, and for that reason, it will affect market sentiments for a while.

If we apply to the process of the Five Stages of Grief outlined by Elisabeth Kubler-Ross, we can see that the involved countries have already moved from denial and anger to bargaining and depression.

What inevitably follows is acceptance – and with acceptance comes the restoration of normalcy, stability and even growth.

Brexit is currently the source of a lot of uncertainty,

Anuj PuriAnuj Puri, Chairman – ANAROCK Property Consultants

India continues to strive for a more globally-aligned image for urban living conditions, which is what the Smart Cities mission is really all about.

However, the primary need if India’s housing market is to rank higher on global benchmarks of urban liveability is still a numbers game. Access to quality affordable housing, if ‘quality’ is primarily defined by location, is still a major challenge for most Indian citizens.

The dearth of affordable homes is only widening, with deficit numbers predicted to reach 30 million by 2022. This, despite the fact that the current Government has clearly understood that quality, quantity, availability and affordability of housing are integral drivers for a country’s economic competitiveness.

To be fair, India has ramped up massively on affordable housing, and this segment has been leading the pack in Indian real estate over the past 3 to 4 years.

The massive impetus that the Government has given to the one electoral promise which got the most attention –  Housing for All by 2022 – has certainly caused a major sea-change.

Thanks to this impetus,

Anuj Puri, Chairman – ANAROCK Property Consultants

RBI’s decision to slash the repo rate by 25 basis point to 6.25 % is a welcome and unexpectedly positive move, given the sops that the recent expansionary budget gave to farmers at an additional cost of Rs 75,000 crore per annum.

It was also overdue, as this has been the first cut in a long time. It definitely augurs well for the real estate sector which also received a budget bonanza in the previous week.

Rate cuts give a substantial push to property buyer sentiments, and it was certainly high time for such a cut.

Home loan interest rates increased by as much as 5-7% in the last year because the RBI hiked its repo rates by 50 basis points over the same period. In other words, home loans had become a more expensive proposition.

However, the real estate market does not depend only on marginally improved buyer sentiment – there are larger issues that hold the sector hostage right now.

The liquidity issues post the NBFC crisis are a bigger concern. NBFCs and HFCs have seriously curtailed disbursements to developers.