Affordable Housing - A Measure By Realtors To Combat Slowdown

By Author: Constance Martinez
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To beat economic slump, which is responsible for the slowdown in the demand for premium segment houses, realtors have shifted focus to affordable or low-budget apartments in the range of Rs 16 lakh to Rs 30 lakh in the National Capital Region, Delhi and all other major Indian cities. This, coupled with decline in interest rates, has lowered the cost of ownership of a house significantly.

The current property market trend has given an opportunity to middle-income buyers to purchase a house. Builders have come up with a number of affordable projects in areas like Indirapuram, Vasundhara, Vaishali, Crossings Republik on National Highway 24, Raj Nagar Extension on NH-58 in Ghaziabad, Nahar Paar area in Faridabad, Greater Noida and Gurgaon.

In Raj Nagar Extension on NH-58, condominiums have been launched where apartments of 1,000 sq ft are available in the price range of Rs 16 to Rs 20 lakh. Considering the prevailing home loan rate of 8%, the EMI on a loan of Rs 15 lakh for 20 years will work out to Rs 12,500.

Likewise, in other cities and areas as well, realtors are offering apartments at Rs 2,000 to Rs 2,500 ...
... per sq ft. To make houses fall in the range of a common man, realtors are now coming up with two-bedroom apartments of the size of 800 sq ft to 1,000 sq ft. Till sometime back, the base model of a 2 BHK house used to be of 1,200 sq ft to 1,500 sq ft floor area.

Undoubtedly, the diminution in the size of apartments has led to a substantial fall in the price. The net price of a two-bedroom apartment has become almost half because of the reduction in per sq ft price as well as in the size of the apartment. Earlier, the price of an entry level two-bedroom apartment of 1,200 sq ft at Rs 2,800 per sq ft used to be somewhere around Rs 33 lakh. But, now, one can buy a similar apartment for Rs 16 lakh.

During the first six months of 2008, builders were selling two-bedroom apartments around the outskirts of NCR in the price range of Rs 2,800 per sq ft to Rs 3,500 per sq ft. Now, the prices of new projects in the same areas have fallen to Rs 1,800 per sq ft to Rs 2,500 per sq ft.

Besides that, as interest rates on home loans have also fallen from 11% to 8%, the EMI on similar apartments, which could be taken as the cost of ownership, has fallen from Rs 34,000 to just Rs 13,400. However, one will not find amenities and facilities like marble flooring and modular kitchens, which were being offered in the earlier premium and luxury apartments.

But, this reduction in the various kinds of specifications has improved the buying ability of a buyer. As per analysts, a buyer can himself / herself add such specifications could in the apartments later on also, when he / she can easily afford them.

Besides developing affordable houses, there are many builders who are offering special schemes to improve the affordability of buyers. A number of builders are asking for only 15% to 20% down payment and are asking the buyer to pay the rest only after two years, when possession of the house will be given. These schemes are saving buyers from paying rentals of their existing houses and simultaneously paying EMIs for their new houses.

Besides that, due to the uncertainty in the job market, there are many people who are still not buying a house. Because of the slump, there are many companies which are resorting to job cuts. This has worsened the situation in the real estate market as well. In fact, developers are very seriously trying to address this problem also. To combat this, some real estate companies have offered their buyers payment of EMI for six months, if the buyer or his / her spouse were to lose his / her job.

In the current scenario, as per the consultants, the end-users, instead of waiting for the prices to fall more, should just buy if they get a good bargain. So, buyers should no longer wait for the so called ‘right time to buy', and instead should bargain for a ‘right choice right now'.
Sukhpreet Kaur writes on behalf of 99acres.com, which is an internet portal dedicated to meet every aspect of the consumers needs in the real estate industry. It is a forum where buyers, sellers and brokers can exchange information. At 99 acres, you can advertise a property, search for a property, browse through commercial property Check out Affordable Housing - A Measure By Realtors To Combat Slowdown