January 20, 2022
Buying a house is a life-changing event that acts as insurance for the future.
For property buyers, choosing the right type of property is half the battle won. The last two years thanks to the Covid-19 pandemic that made the task of many property buyers, easier and simpler. Today, they are spoilt for choices, from ordinary apartments to duplex and studio apartments, villas, penthouses, and even row houses.
If you’re one of those home buyers looking to buy new flats in Chennai, then the upcoming year 2022 will make your dream of owning a home a reality.
Here are the five reasons that make the upcoming year 2022 a good period to buy a house.
In 2021, to boost economic growth and also shore up the flagging fortunes of the real estate industry, the RBI reduced its repo rate drastically.
Following this, many of the leading financial institutions in India including the State Bank of India, Canara Bank, Bank of Baroda, etc, and private banks like Axis Bank, etc, all slashed their home loan interest rates. They reduced their marginal cost of fund-based lending rate called the MCLR. In fact, the interest rates were at their lowest levels ever in the second half of 2021.
Many market experts believe that this is the best time to buy a home. They believe that the interest rates may not go down further. Further, they feel that as the economy bounces back and the real estate industry stabilizes, which they expect to in the latter half of 2022, the interest rates will rise again.
Many State Governments lowered the circle rate and stamp duty following Covid-19, to bolster the real estate market, and create demand for housing. The reduced rates are still in force in many states.
Stamp duty is a considerable amount that is computed on the circle rate/government rate or the property’s agreement value, whichever is higher. By reducing it, demand for residential property increased significantly in many parts of India in 2021 and is expected to continue through the first half of 2022.
Those who take a home loan are eligible for income tax benefits under several sections like Section 80C, Section 24, and Section 80 EEA. Put together, these sections offer a benefit of up to Rs 5 lakhs.
For a first-time home buyer, the income tax incentive is up to Rs 1.5 lakhs under Section 80C. This tax benefit will be available under both the house loan stamp duty and the home loan principal categories. Similarly, the home buyer would also be eligible for a tax exemption of up to Rs 2 lakhs under the category of home loan interest of Section 24. Likewise, Section 80EEA offers an income tax benefit of up to Rs 1.5 lakhs. The only hindrance here is that the stamp duty amount of the residential property must not be more than Rs 45 lakhs.
Residential property prices remained stable during the whole of 2021 and are expected to remain so in the upcoming months of the year 2022. With interest rates still at historic lows and property prices stable, it remains a good time for home buyers.
According to a report titled, “2022 Outlook Report”, by property consultant Knight Frank, the residential as well as commercial real estate prices in India would have a more stable year in 2022, when compared to the volatility of 2021. However, it warned that if the supply and demand-side equations remain favorable, then the residential property prices are likely to witness a jump of a 5% rise in 2022.
Thanks to the changes induced by the Covid-19 pandemic. Work from home is increasingly becoming more common today. This makes it imperative for many working professionals to buy a house. With home loan interest rates still low, realty prices still stable, builders still offering discounts and incentives, etc, the current period remains the best time to have a home of your own.
Some economists also believe that with millennials keeping the demand for houses high, the real estate industry will have a hard time keeping up with the demand. This will ensure that the prices continue to stay stable, thereby making it a good time for property buyers to buy a house.
After two very difficult years, there has been a recovery in demand for houses. Factors like reduction in stamp duty, historically low home loan interest rates, discounts offered by builders, etc, have all helped fuel rising demand for homes.
But for the momentum to be sustained and grow even better, expectations remain that the upcoming year 2022 budget will take it forward. Both builders and homebuyers are expecting that the budget will come up with better home loan incentives and also extend the deadlines of several housing-related subsidies that are expected to end in March 2022. Likewise, they also expect that the RBI will also continue to keep the repo rates at the existing level to facilitate continual low home loan interest rates.
The home buying sentiments continue to remain high. However, 2022 may not be an easy year for long for the average home buyer. This can be especially so for those who are looking to make a conscious decision to buy a house.
The reason for this is that the fundamentals of the market and the macroeconomic outlook paint a picture of 2022 as one that could turn out to be different as well as challenging. This could make the task of property buyers, a less easy decision than what was in 2021.