Buyers are losing trust in the builders and possession delays after booking the house being the primary reason behind that. A majority of the buyers seeking the new houses to live or to rent are interested in the ready-to-move properties as compared to under-construction or the old houses.
The people who are living on the rent, are at the most disadvantage. They have to pay the rent as well as the EMI for the under-construction house. They also do not get the tax benefits on the property if the possession is not obtained within the five years of drawing loan. The delay in possession means additional financial burden.
Investing in the under-construction properties is kind of a risk. The time till the house gets ready to live in, a lot of things change around it. It may be possible that another builder started a project in front of the building and offers cheaper possession prices. If the buyer is seeking for tenants for the house, he may have a hard time finding them.
Even the renowned builders suffer the delays in delivering the project because of the delays in getting the proper permits; if the lack of funds is not the reason. As such, the contemporary home seekers are showing more interest in the ready-to-move properties even if they have to pay extra. The ready-to-move properties gain a premium of around 5% over the under-construction houses. The obvious reason being the low risk in getting the keys of the house.
No doubt, the low costs of the under-construction houses provide an excellent opportunity to the investors to enter in the different construction stages and exit when the property prices are right. But the end users are not very excited as the time of possession is not certain.
Now, let us see the other side of the story.
The developers are forced to complete their project fast and as such the inventories are increasing. The year 2015 was considered as a slow period for the Indian real estate or a dip in the real estate curve was observed. The primary reason being the supply more than the demand. It is no brainer that there would always be a need for the houses to live in but when every builder sees an opportunity is gaining more on the possession-ready houses, they speed-up the process. Now, the affordable houses have a better fate than the luxury ones.
Due to the accumulating inventories, the developers are selling the houses at very low costs. The present time is defying the fact that under-construction property is cheaper than the ready-to-move ones. Yes, so we are contradicting our own statement. But this is how the real estate market of the present time is.
It is the difficult times for the developers who are relying on the upfront booking money to continue the project. If their under-construction projects do not get an investment, they are unlikely to get completed.
This is a problem.
But there is a solution.
The developers need to gain the trust of the buyers. They need to have an excellent project delivery track record. The buyers would invest in an under-construction property only when they are sure about the timely possession. Two or three builders can club their funds and come up with better housing solutions that get sold quickly.
This is about the modern home seekers, what about you? Many people will give you worst home buying advice but do what seems to be the right plan for you at this time.