by Mr. Arvind Jain, Pride Group
Buyer paralysis - or, as it is
popularly known these days, the 'wait-and-watch' syndrome - is one the
main reasons today why aspiring home owners do not make their move.
Dream home
There are various reasons why people
prefer to sit on the fence rather than in their dream home. Probably the most
significant one is negative market messaging via various information channels.
In India today, fence-sitting buyers
are waiting for 1 of 2 things to happen - for property prices to come tumbling
down, and for home loan interest rates to be brought so low as to become
irresistible.
 |
| Arvind Jain, Pride Group |
Of these 2 factors, a correction in
property prices would definitely be the stronger incentive. Obviously, a
combination of both would be the most preferred scenario.
Mind Set Results..
There are also other reasons why
people who long to own a home do not take the plunge. For instance, they may
have become confused by conflicting objectives and are looking at the whole
issue of home ownership from an investor's viewpoint.
Such a mind-set results in people
either waiting for the right 'entry point' (the lowest point to which prices
will drop) or / worrying about the 'non-liquid' nature of property (gold or
stocks can be turned into cash much faster if a financial crisis arises).
Another reasons for buyer paralysis
can be the expectations one has set with regards to the desirable size for a
home. Many aspiring home buyers feel that their dream home should be large
enough to make their own senses boggle, and the source of envy for all their
friends and relatives.
Since, homes beyond a certain size
are beyond their purchasing power, they plan to save until they have enough to
make a sizable down payment.
For homebuyers-in-waiting, a deeper
understanding of the dynamics of the real estate market - and the various
options open to them - can often bring them closer to finally achieving their
goals:
**
Price corrections do not happen the way most people imagine, if they
happen at all. In the first place, they do not take place uniformly across all
cities, but only in cities - and more importantly, in locations - where there
is too much stock and no sales.
If sales are taking place, even at a
slower rate, prices will not drop. This is, in fact, one of the main reasons
why investment in the right property at the right location is such a safe bet.
**
Housing loan rates are decided by the state of the economy - banks can
not arbitrarily bring down interest rates, even if doing so would increase
disbursals and therefore their own business. When the economy improves, so do
lending norms.
The factors that positively affect
economic performance cannot be willed into motion, but depend on a huge
plethora of macro factors. Moreover, the monthly outgoings on an existing
housing loan will automatically decrease when interest rates come down
(provided that the loan is on a floating and not fixed rate of interest).
**
Home purchase and property investment are 2 very separate concepts.
A home is one of the things we buy
because we intend to put them to use and make our lives more secure and
comfortable.
An investment property is something
we buy in order to sell it at a sizable profit a few years down the line, and
to rent it out until then. Homeowners view their homes as a source of stability
and security, while investors see their holdings as tradable commodities.
** Size DOES matter - but not all
that much. If you are in the position to buy a 2 BHK in a good location today,
you can be assured that it will appreciate in value.
Assuming that you expect your income
to grow steadily as well, you will always be able to upgrade to a bigger home
in a few years. The appreciating nature of well-chosen property also means that
waiting until you can make that hefty down-payment on a larger home may not
work simply because the prices for such homes would also have increased.
Like all mind-sets, the wait-and-watch
stance can become a chronic one for no better reason than that it has become a
habit. The decision to postpone the purchase of a home should not be on the
basis of limited information.
In fact, such a course can be
self-defeating and put your dream home further and further out of reach.
About the author..
Mr. Arvind Jain, Managing Director - Pride Group
For Media Contact
Mr. Jay Kalghatgi
Client Interface - CopyConnect
Mobile: 93201 42248
No comments:
Post a Comment