What do home buyers expect? A price cut or freebies?
Off late we have been hearing that the number of unsold houses in metros like Mumbai Chennai, Bengaluru and Kolkata have increased a lot. The unaffordable pricing is the key reason that stops many people from buying houses. The decrease in sales have resulted in a large inventory pile up. Builders are in an urge to turn down all their property inventory into cash. The piling inventory is frightening the builders to a greater extent that they have now started to offer various discounts and freebies to attract buyers.
The property research firm LiasesForas have recently come up with certain research that figures out about 832.09 million square feet of unsold inventory as on end of December, 2014. It also says that home sales have also witnessed a dip of about 8% in six cities such as Mumbai, NCR, Bangalore, Chennai, Pune and Hyderabad. These figures showcases the current situation of real estate in India. The housing inventory is about 321.68 million square feet in NCR, about 152.43 million square feet in Bengaluru, and about 192.27 million square feet of property sites in Mumbai.
With such decreasing demand and increasing inventory, top builders in Mumbai and other metros have now started to attract buyers with offers such as, no registration cost, zero stamp duty, no additional cost for higher floors, 25% discounts on per square feet rates, interest subvention on home loan rates, free parking area, free furniture, modular kitchen, free interior wood work, air conditioners, gold coins and even cars for luxury flats in Mumbai, Chennai and other cities. Not just these certain builders also offer a free studio apartment for people buying top floors of luxury residential block. There are also some investors who offer a free trip to Singapore and Malaysia for all who have booked apartments.
When the investors and top builders in Mumbai and other metros are on the verge of giving away freebies instead of reducing the prices, buyers on the other hand are not ready for freebies. Buyers expect a price cut that will help them manage their finances in future. Builders think freebies may help them reduce their inventory and make buyers turn head towards their houses, but buyers are only keen on the prices. It is so because, as the prices go high, the amount of loan from bank will also go high that they will end up paying a huge amount as monthly EMI. With their future financial status and crisis expected, buyers are still keen on price cut and not on free offers. But may be some builder offer discounted prices that may be a go od news to buyers.
But a good news is that some top builders in Mumbai and other cities give away the choice to buyers to choose between discounts on prices and freebies. Despite increasing inventory and decreasing demand, the residential and property in Mumbai, Chennai, Bengaluru, Kolkata, NCR and Hyderabad have increased during the first few months of the year 2015. The property prices in Mumbai have increased to about 10%.
With these current real estate trends, buyers are still waiting for a reduction in property prices and discounts in home loan interest rates.
Sulabha is an Indian housewife who loves to write on Real Estate. She is a regular contributor to the columns of many property portals and also to IndiaProperty.com.