Is it the best time to buy a house? Yes, say experts

In a recent interview, Keki Mistry, chief executive at HDFC said it is best time to buy a property

Lower prices, lower interest rates and rising affordability have made it the best time to buy residential properties, say experts.
 
In a recent interview, Keki Mistry, chief executive at HDFC said it is the  best time to buy a property.
 
" First, by virtue of the fact that interest rates are significantly low. Since 2008, e whave not seen rates as low as this. I don't believe rates will go down any further.Second, property prices haven't gone up in recent times so one would believe there is time correction of prices. Third, all incentives are provided by the government for people to buy houses,"Mistry said.

 

Rates:
 
Mortgage rates have come down by 150 basis points in the last two years bringing them down to 12-year lows, and this is gradually improving affordability. Every 100 basis points mortgage-rate cut is equal to 5-6 per cent price cut, CLSA has noted.
 
Prices:
 
Housing prices fell by 1.67 per cent to Rs 6,185 per sq ft in Q4 (January- March) from Rs 6,290 per sq ft in the December quarter in major cities such as Gurugram, Noida, Mumbai, Kolkata, Hyderabad, Bengaluru, Pune and Chennai, data analytics firm PropEquity has said.
 
According to international brokerage firm CLSA,the price of a mass-premium house located in a metro city suburb having a ticket price of Rs 60 lakh has remained flat on a year-on-year basis.

 
"For buyers it is a good time to buy as buyers have remained stagnant in the last three years. In fact they can get discounts. But for investors, if they get a distressed valuation and no completion risk, it is not a good time," Amit Bhagat, chief executive at ASK Property Investment Advisors.
 
Rising income:
 
According to a CLSA report, income growth in the last three years has overtaken housing prices and affordability in the current fiscal is the best since 2005.
 
The post-tax household income has increased by 7.5 per cent year-on-year, in FY18 to Rs 13 lakh per annum even as the loan-to-value ratio (LTV) is at 70 per cent, and the mortgage rate at 8.5 per cent.  This led to a significant increase in the affordability than in the past.

 
Finally, the government has accorded infrastructure status to affordable housing in Budget 2017 which would enable developers operating in this segment to raise loans at a cheaper rate, akin to other infrastructure projects. The builders in turn would be able transfer the benefits of cheaper loans to the first-time home buyers, who would get them at cheaper rates.
 
Earlier the subsidy on home loan interest was available to only those earning up to Rs 6 lakh per annum. Under the extension of income slabs for giving subsidy to first-time home buyers, the government announced two new slabs in Budget 2017. The new slabs apply to loans with tenure of up to 20 years against the limit of 15 years currently. The subsidy has been extended to those in the income slab up to Rs 12 lakh per annum  and Rs 18 lakh per annum. Now, people earning up to Rs 12 lakh per annum will get interest subsidy of 4 percentage points on a principal amount of Rs 9 lakh. Those earning up to Rs 18 lakh per annum will be given a subsidy of 3 percentage points on a principal component of Rs 12 lakh.