Reasons to buying real estate in 2021

it is a good time to buy real estate if you have the liquidity but there is a catch.

think about life before the pandemic. people working in big urban centers like Mumbai, Delhi, and Bengaluru would stay close to work to cut down on commute time. what they saved in time, they paid for in money because rents in commercial hubs are higher. but the pandemic changed this; people could do their job in Pune for a company headquartered in Mumbai.

this, along with cheaper real estate away from urban centers, allowed many to step out of renting and move into owning apartments. in fact, according to a report, people bought more high area apartments in Q1 2021 than Q1 2020. there is more to this than just work from home.

Attractive rates on loans

home loan interest rates are the lowest they have been in 15 years. the RBI has kept the repo rate low and unchanged. this means that banks are able to borrow from the central bank for cheap, and therefore provide loans at a lower rate of interest.

A lot of liquidity

India has seen over 1.4 crore new investors over the past year, which has also witnessed a bull run on the stock markets. this led to increased liquidity and household savings.

There’s opportunity

the economy weakened, as the GDP numbers show, and the capability of buying new homes reduced. in January-March, India’s economy showed signs of life and then was forced to pause again. Apr-Jun quarter sales are 58% lower than in the Jan-Mar quarter due to the latest set of lockdowns.

this meant a lot of homes have been sitting on the market with no buyers coming in for them. economics 101 has kicked in and prices have dropped.

WFH is here to stay

last year, when offices were closed, many people had returned to their hometowns to save on the costs of living in a big city. now, a majority of organizations ranging from Google, Microsoft to TCS are considering continuing with a hybrid model of remote and in-office working. there will be many more permanently remote positions than before.

Greener pastures in demand

this means people are happier to move further away from financial centers, even permanently. this opens up access to properties that wouldn’t have been ideal before. real estate sales in Tier-II cities are on the up. the cities themselves are seeing development in the form of rising urban-centric ways to attract more buyers. living in a farmhouse hundreds of miles away from the office is no longer an unattainable dream. you could even join the crowd of people living out their beach house dreams in Goa.

Watershed moment

the trend, however, was set before the pandemic. in the US, for example, even before the lockdowns, the older generation over the age of 50 was looking to sell over 20 million homes. this means, in a distressed market, younger people found interesting bargains. some of these bargains are now available in India as well. in the NCR market, for example, 85% of homebuyers in the nine months between July 2020 and March 2021 were first-timers. meanwhile, India’s richest are eyeing the likes of Dubai, London, and New York to buy a home

In the end: the timing is great, but buying a house is a long-term decision. a recent survey of close to 1,500 homeowners in the US showed that 64% of millennials had regrets over buying their current home. very little of it had to do with owning the home itself but instead concerned many variables that come attached with homeownership. it’s important to take them into account before making a decision.

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