Is this the right time to buy a flat ?

is this the right time to invest in real estate

Is this the right time to buy a flat ?

 

 

 

 

 

 

 

 

 

 

 

 

 

The million dollar question ! and no satisfactory answers. Everyone seeks advice from their friends and families. Half of them say yes as the prices will increase going forward and the rest says “no, don’t buy now… real estate is overpriced… stay out of it”. Guess what, you have got your answer…

There is never a right time to buy…..

For the following reasons the time is always right

  1. You are buying to live in your own house
  2. You are buying to live in a house that you can design or decorate to your taste
  3. You are not obliged to search for your next place as the rent agreement is valid for only 1 year or your landlord is asking for significant rent increase.

Only thing you need to check is that whether you have enough income/savings to buy one. I will be describing about the financial aspects in the coming sections.

Before I close this and lead you to the next part there are few macro-economic factors which always leads you to think that for END USE, the right time to buy is now !!! .

India is a growing market with a GDP growth of over 7% be it slow down in the rest of the world or else. The metro and the tier 1 cities always grows at 7-10% over an average. As time passes by, more people migrate to the metros while the availability of land never increases i.e supply is limited over the long term… Hence over the medium term prices for land and apartments will increase.

  • Hello Everyone,

    I must say that I found this website very useful. What was more appealing was the interest Jis showed in understanding the House Construction problems and concerns I had and responding to my queries. Thought of sharing the below conversation I had with Jis in order to benefit the many readers of the article. Thanks.

    —————————————————————————-
    Hello Jis,

    I read your article on the internet today:

    http://www.goodhomeadvisor.com/blogs/should-i-buy-a-flat-or-an-independent-homevilla/

    Its a good one. It would be very kind of you, if you could take some time to read this email and give me some advise. Thank you in advance :)

    I have a plot in Chennai which is located in a “not-so-developed” area. Its a 1700sq ft plot. There are few individual houses coming up and a few small flats. I am an IT professional and most of the IT companies are located at around 20-25 KM from the plot. The place where I reside now is a township(I’m just a tenant here). But here too, I’m travelling 25 KM to reach my office. The difference is that the road is a highway and I can reach my office in 30-40 Minutes. But the road from my plot to the office is not a highway and takes 1 Hour and 30 Minutes to reach there.

    I have a budget of around 26-30L and the apartments cost more that 40L in the area where I reside now. I think I can construct a better house(in terms of design & quality) with my budget than buying an apartment in a township. I would like to have your advise here:

    Is it a good idea to construct a house now and start residing there leaving all the luxury I enjoy in the township apartment now? Do you think I should wait until the area gets completely developed and then think of constructing the house?

    Your help would be much appreciated. Thank you. Looking forward to your reply.

    Kind regards,
    Suraj

    Reply:

    Hi Suraj,
     
    Thank you for reading the article and do provide any valuable feedback that you may have.
     
    I am assuming that this is a longer term decision that you are going to make. Few resources that are very critical to ensure are:
    1) Regular and sufficient water and electricity supply  – the scarcity is going to increase going forward
    2) Availability of convenience stores nearby.
    3) Security of the locality especially if you will be living with your family
     
    You must consider above mentioned factors before starting to living in your owned plot. Ofcourse with regard to utilities such as electricity and water, there are possible ways to alleviate by using back-up, but ensure they would be sufficient. But security and safety is something that should not be compromised on and if your plot is in a place where you have good neighbours then it would help. 

     Based on your comments, another key element that you need to consider is the travel time. If you are saving 1 hr in each direction every day that is 2 hrs in a day to put this in perspective, this would imply, saving alomost 20-30 days of your life in a year.  There are much better ways to utilize this time either in office or having more time with you family. Hence on this basis alone I would suggest to reconsider your options. If you think this is only a temporary problem then the decision point will be different. 

     While you may delay the shifting to your house given the possible time saving and availability of facilities, with regard to building the house, I would not suggest that you delay the development of the house as it would anyway take a 12-15 months by the time you finish construction. This would definitely be an asset as both labour cost and material cost is expected to increase in coming years with the high inflation we are seeing in the market today. 

     This would enable to generate rental income, apart from this you can also get tax exemption which will definitely offset to help you to save for staying in your current township on a rental basis. 
     ·         The benefit of building the house is that you can get tax exemption of 1.5lakhs per annum on your home loan which comes to savings of ~50,000 a year.
    ·         Once the construction is completed and if you feel that the facilities near that area is not enough for a stress free family life then you can give your home for rent.
    ·         If you are planning to shift to save on rent, then you need to evaluate the benefit as you would lose the benefit on the HRA that you claim. 
     I would suggest you can read the following article 
     
    http://www.goodhomeadvisor.com/blogs/home-loan-tax-benefits-frequently-asked-queries/
     
    http://www.goodhomeadvisor.com/blogs/home-loan-tax-benefits-simplified-know-it-before-you-buy-a-home-for-saving-tax-2/

     Since you have mentioned houses and flats are coming up near your area it seems that the area will get developed within 3-4 years which is not a long duration. Once the area is developed you can move to your own home and enjoy a much better stress free life.
     
    [If you like my article please share this article on google+ and facebook.Also please post your query in comment section of my blog so that it will be beneficial to many of my readers]

    Regards,
    GoodHomeAdvisor