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Before buying a home

Ganesh Vasudevan Sep 8 2017, 1:19 IST

Bengaluru is known to be one of the top stable realty markets in our country. Even though property prices have skyrocketed in the last decade in the city, most of the residential areas witness steady demand from both property buyers as well as tenants.Are you considering buying your dream abode in the Garden City? Worried about what all to consider before investing in one? Then, here are some of the prime pros and cons of buying a house in Bengaluru:

Pros
• If owning a house has been on your ‘to-do’ list for a while now, then you should finalise a property soon as home loan interest rates are low and are likely to go further down in coming months. The current RBI repo rate stands at 6%, which is the lowest in the past seven years, making home loans cheaper for borrowers.
• The metro rail network in Bengaluru is growing, making commuting simpler for residents. One of the biggest hurdles that Bengaluru today faces is massive traffic congestion and the hours that commuters have to spend on the road to cover small distances. Recently, the metro rail stretch between Sampige Road and Yelachenahalli was inaugurated, which makes the complete 42-km Phase 1 of Namma Metro functional. With success of Phase 1, the government is likely to launch new phases connecting more areas.
• Being the IT hub of the country, Bengaluru will always witness steady demand from buyers and tenants, making investments in houses safe here. Even if the homeowner moves to another city, he can get good rental income from the property.
• Most apartment complexes in Bengaluru come with many attached amenities like swimming pool, gymnasium, children’s play area, security system etc., reducing the need to go out or give additional charges to avail such facilities elsewhere.
• Since the holding period of Long Term Capital Gains Tax (LTCG) for land and immovable assets is now reduced to two years (it was three years earlier), investors don’t have to stay invested in the property for along time.
• Post demonetisation, banks have had excess liquidity, but are also experiencing sluggish lending from borrowers. So, coming festive season many banks would try and attract potential buyers to build their books.

Cons
• Post implementation of RERA and GST, there is still slight confusion in the market, and developers would take few quarters to understand and transfer all the benefits to buyers. So, many property seekers are also equally confused as they are not getting clear answers.
• Property prices in Bengaluru are high compared to the present infrastructure and connectivity in the city. The rental income is steady but in most of the areas, EMI is roughly 3.5 times the expected rental, making the returns slow.
• In the current market, investors can’t expect short-term gains from buying and selling property in Bengaluru. For long term, gains from real estate transactions won’t beat returns from thestock market. So, market conditions are ideal for end users and investors seekingto decant returns in the long term, but not for short-term investors.
• In the past few quarters, the city has witnessed a drop in new launches. With areduction in available supply, property prices are expected to witness aslight hike in prices.
• There is no universal ‘right time to buy a property’, it always depends on the individual and his/her life situation. Depending on income stability, savings, individuals credit score, future goals and expectations from the property, one can decide whether to invest in a property now or at a later stage.

(The author is CEO, Indiaproperty.com)

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