Buying a house in this market – Is it the right time?

Here are five reasons why it is the right time for buying your first home in India

November 27, 2020 9:10 IST | India Infoline News Service
Are you looking for what you can call your “home sweet home” in the Indian real property market? Is this the right time to be a “first-time homebuyer” or should you wait for some more time? With the Indian economy just beginning to emerge from the pandemic-related effects, these questions are but natural for any long-term home investor.

Whatever be your reason for looking for your own home, the current phase is indeed the best time to take the plunge. Why is that? Here are five reasons why it is the right time for buying your first home in India:
1. Stability in the Indian real estate market
In the current economic uncertainty and pain, investors are looking for assets that are stable and provide decent returns – if not high returns (that are deemed as “high risk” domains). As compared to constant volatility in the stock market, real estate or the property market has in recent times, gained positive sentiment among investors as being a stable and reliable asset.

Image source: JLL India

Along with these factors, the economic revival and improving job security in the country promises consistent returns from the rental market – if you are not planning to self-occupy your purchased house.

2. Decline in property prices
Even before the pandemic, house prices had declined – according to RBI estimates – by 1% in the first quarter of 2020. Furthermore, various polls estimate house prices to decline by 6 percentage points this year – and by 3 percentage points next year.

Add to that, even “previously overheated” upmarket locations in Mumbai is going through a “cooling down” phase – with the rents plummeting by up to 25%. Overall, the correction has not just been in the high-end luxury segment – but across all property segments including student houses.

Image source: Bloomberg Quint

Thanks to the recent slump in sales and rise in unsold inventories, real estate experts state that this is probably the best time for property buyers as they can get the best price deals even on ready-to-move-in properties - as opposed to just under-construction projects.

3. Home loans at low-interest rates
Another reason why you should buy a home now is the reduction in home loan interest across many banks including SBI and Union Bank of India. This has been mainly enabled by the RBI’s decision to reduce their repo (or lending) rate to banks.

As a first-time homebuyer, you can avail of a home loan at an interest rate as low as 6-7% - as compared to 8-9% just a year back. This means that for a home loan of INR 50 lakhs taken for 20 years, you can save around INR 4,500/- in monthly EMIs – or up to INR 11 lakhs in EMI saving over 20 years.

Image source: Moneycontrol
What makes low-interest rates sustainable going forward is that they are unlikely to be revised upwards – given the current real estate slump and economic uncertainty in the country.

4. Better property deals
Apart from low property prices and loan interests, homebuyers can also avail themselves of many lucrative deals being offered by property developers. This has been mainly driven by a large number of unsold flats (thanks to the extended lockdown period) and builders looking to clear these inventories before working on new projects.

Some of the freebies being offered by builders during the present festive season include cash discounts, easy payment schedules, complimentary home interiors or décor, free club membership, and even free iPhones.

5. Buyer’s market
All in all, Indian real estate now looks like a buyer’s market with most builders and developers facing a crisis with falling house sales, lower prices, and a limited number of new project launches. The current scenario is drastically different from previous economic downturns – as the property market largely continued to be “overheated” and over-valued.

Today, home buyers are in a much better situation thanks to higher Loan-to-Value (LTV) ratios and the availability of cheaper credit.

Image source: The Economic Times

With the immediate future being uncertain for most real estate companies, it is the right time for first-time homebuyers to take advantage of the situation and find their dream home at a reasonable price.


Despite all the buyer’s advantage, you should still take necessary precautions before signing up with any property developer for your dream home. Furthermore, if you are only looking to enhance your returns from your invested capital, it may not be sensible to invest your money into property. In short, take a plunge into homeownership – only if you are prepared for it.

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