No sops in budget for home buyers

Prices to remain flat or go up by 20 per cent

No sops in budget for home buyers

Builders may have benefited by the State government’s decision to levy uniform stamp duty of two per cent for Joint Development Agreements (JDAs) and General Power of Attorney (GPA), but consumers/home buyers haven’t got any concessions on the cost of residential purchase.

The pricing will remain the same or only go up. It wouldn’t come down given that the guidance value has been changed according to market conditions. The budget therefore has no sops for consumers.

Real estate analysts say prices of apartments will remain flat or only go up in the next three to six months, which means buyers will continue to pay high amounts. They say that the guidance value revised by nearly 30 to 100 per cent has impacted residential pricing.

Navin Nandwani, analyst, says that value of land itself forms 50-60 per cent of the total cost of the residential project, which means builders have to price the product accordingly. Builders may have got relief from a specific stamp duty, but they haven’t been able to skirt the higher guidance value. Moreover, the government has said it would monitor guidance value periodically and revise it according to the changing conditions.

Builders will have to fix residential pricing anticipating these changes. With the tendency of guidance value to go upwards, no concessions will be forthcoming on prices. So from a guidance value perspective, consumers have not got anything from the budget.

Other analysts say that even from the perspective of raw material costs, the budget has not delivered anything great for consumers.

The prices of apartments have grown 20 per cent over the last three years and in the next three years, it is expected to go up by another 20 per cent if not higher. The year-on-year jump in construction costs due to higher prices of building materials also doesn’t give room to builders to reduce prices for consumers.

Builders, however, analysts say, cannot be complacent about pricing because if the prices go beyond an optimal level, apartments become unaffordable and stocks of empty apartments would go up. The prices of apartments have to be high, but not so high as to make them unaffordable. In this context, builders tend to absorb the JDA and GPA stamp duty.

In comparison to other metros, Bangalore market is not recessionary. The supply of residential space is quite high because the demand is high. Stocks of apartments are ready for the next year and may be even for an additional year. The present stock could be around 45,000 apartments, some fully ready and some being built. These apartments are located mostly in east, southeast, south and north Bangalore.

The southeast is perhaps the region with the highest density of residential space. Builders say they are confident that sales will happen because of the growth of IT offices in and around Whitefield, Marathahalli and Sarjapur. Hebbal in north Bangalore is also shaping well.

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