Revival of the Residential Realty Market as a Buyer's Market

After a few years of stagnation, finally a glimpse of a revival in the residential segment

The Situation So Far
The otherwise fast-moving Indian residential real estate sector, in major property hotspots had been hamstrung for the last few years, due to the large inventories of unsold units. Among the glaringly evident reasons for the slow-down were the incompatibility between the nature of the supply chain with the affordability factor of buyers, and the adamancy of builders to recognize the signs and reduce prices. With increasing despondency, buyers have waited as their dream homes remained out of their reach.

Good Sense Prevails
The downswing in fortunes perhaps has forced a re-think in developers and builders and since then there seems to be a perceptible correction in prices, aimed at reviving the momentum of sale of a piling unsold inventory.  There are also indications that developers are attempting to focus on re-working the nature of the houses they build, to accommodate the first-time aspiring buyer with property more within their price range. Taking a cue from the gloomy outlook of the past few years, developers have, in the first quarter of 2016, launched as many as six times more new projects in the affordable housing segment, where prices hold sway over the buyer’s decision.

A Buyer’s Market
In a sluggish real estate market, inventories tend to pile up as even ongoing projects are completed. As demand wanes, developers with stretched budgets are likely to reduce prices with offers for a short term. In fact the buyer’s power to negotiate with the seller and to hold on a little longer in making their decision increases. If buyers encounter adamant realtors, they should be undaunted and prefer to move on to other projects where they may get a better bargain. Buyers need to realize that for the first time, they can call the shots in the residential property market. They should do a proper background check about the track record of the property they are interested in. If the house has been up for sale for a considerable duration and has not yet been sold, they can safely assume that the seller would be keen to offer additional incentives and should try to leverage this to their advantage. ‘Freebies’ may include furniture, electronic appliances, gold coins, free registration and stamp duty, free maintenance for a year or two, and many such privileges.

Advisory for Buyers
Buyer when faced with a surfeit of housing stock should be careful to not be lured into a deal prematurely, without having checked other options in the same locality or price range. Care should be taken to opt for established and growing sectors of a location with a robust infrastructure and the scope for future improvements, which will impact the value of their purchase later. They should also very carefully examine the incentives offered to ensure that there is no present or future hassles in the fine print.

They should verify the reputation of the builder for the quality of construction, delivery record, post-sales documentation, and other relevant details. In case of under-construction properties, the buyer should look for those that are in an advanced stage of construction and which are promised in the sale deed to be delivered with a year or a-year-and-a-half.

Buyers should ensure due diligence while drawing up of the sale deed and ascertain no lacunae exists, that can jeopardize the future prospects of the property.

The buyer seems to be ‘king’ at this moment.