With prices at its competitive best post demonetization and all the other policy changes, this has been pegged as the best time to purchase a house in almost a decade. A CLSA report says that income growth in the last 3 years has overtaken housing prices, which means affordability has increased and is at its best since 2005. So although the price of a mass-premium quality house in the metro has more or less remained flat on a y.o.y basis, the post-tax household income has gone up by 7.5 per cent y.o.y to Rs.13 lakhs per annum. The LTV (loan to value) stands at 70 per cent and the mortgage rate at 8.5 per cent, making it a perfectly conducive scenario to afford a house. LTV refers to the ratio of a loan to the value of an asset purchased.
A study by PropEquity across 8 cities shows that the weighted average price of unsold apartments fell to Rs.6185 per sq.ft. over the December quarter, down by 1.67 per cent.
Financing made easier and more affordable
Mortgage rates are at a 12-year low, down by 150 basis points in the last two years. A 100 basis points mortgage rate cut is equal to 5-6 per cent price cut, according to CLSA.
In seven of the eight top cities in India, builders were faced with excess inventory post demonetization, and were eager to liquidate it with low prices.
The Government under Prime Minister Narendra Modi, has come up with the Affordable Housing Scheme which aims at providing Housing for All by 2022. A number of measures are being taken to incentivize affordable unit construction like offering lower tax rates.