The current pandemic has made an impact on every industry sector and real estate is no different, particularly the residential real estate. Instabilities induced by this pandemic have increased the importance of investing in residential real estate, as that provides a sense of security. Furthermore, underperforming mutual funds and volatile stock markets have raised the necessity for investing in stable class of assets, which not only gives higher returns but also offers stability. Investing or buying a home can be the best option during times like these.
With a good buyers’ market and lower interest rates, the residential real estate is actually at its best right now. Currently, realtors are receiving double the number of housing enquiries in top cities like Bangalore when compared to the pre-pandemic times. Besides, modestly priced, ready-to-move in apartments are dominating the market, with highest interest from the buyers.
6 Reasons to Invest in Residential Real Estate Now
Let us now take a look at the top 6 reasons that make residential real estate a great investment choice.
1. Positive Influence of Supply Side Factors on the Market
Currently, the residential market valuations are not overheated like before and there is a paradigm shift from the seller’s market to the buyer’s market. There is also significant reduction in the rate of interest for home loans. Adding to this is the present benevolent tax regimes, which offers tax benefits for both – the end users and the developers. Positive portfolio rejig is yet another factor that is benefiting aspiring home owners. While previously only portfolios like vacation homes, senior living, etc. were prominent, currently, there is much relevant project portfolios designed for budget-friendly users, particularly targeting the mid-segment housing.
2. Minimal Home Loan Rates
Over the past few years, the repo rate is reduced by the Reserve Bank of India (RBI) on multiple accounts. This has resulted in a plummet in the interest rate on home loans by sub-7% levels. This is a record lower rate of interest that any home buyer should not let go off. With minimum home loan interests, buying a residential property is now an easy target for most of the people.
3. Superior Government Support
Government has announced fiscal and various other stimulus packages currently. The demand for residential real estate is local in nature. Currently, Bangalore is doing great compared to other cities in the residential real estate sector. Newer and refined government policies for the NRIs have also contributed to an increase in the investments in the residential real estate sector in Bangalore.
4. Demand Side Factors
Previously, the residential property market has unfavorable interest rates, higher valuations and perishing Loan to Value (LTV) ratio. However, the current scenario is different. It is highly favorable for the buyers with economical credit availability, higher LTV ratios and lower valuation. Besides, quicker possessions are making it easy for the potential investors, as it decreases the burden of paying rent and EMI both, for those who are planning to move from a rental property to their own home.
5. Stable Asset
The pandemic outbreak, unstable stock markets, etc. have all hugely emphasized the need to have a stable asset that helps to sustain volatile conditions. Residential real estate is a stable asset that offers security as well as good long-term returns. This has made several people invest in premium, flats and apartments. With the gradual economic revival that comes with job security, rental yields are also expected to remain stable.
6. Reasonably Priced Homes
Currently, the housing units are available at extremely reasonable prices. In fact, the time is just right to invest in residential real estate, as premium apartments are becoming more and more affordable now. Furthermore, wider selection of ready-to-move in homes is making it easier for aspiring home owners to choose
Next Steps
While the socio economic uncertainties may continue, residential real estate sector can be the ideal investment option for potential home owners. This not only offers immediate security, but also offers higher long-term returns. Supportive government reforms have made residential real estate more viable and easily affordable.