In a growing city like Pune, wait-and-watch policy may push properties that the buyers are keen on buying beyond their reach
There are many people who prefer to sit back rather than take the plunge in the hope of a price correction. The policy doesn't necessarily bear fruit. It's important to identify an opportune moment and seize it with both hands.
“Every consumer looking to purchase any product would defer his decision to purchase if he believed prices would come down. As people talk about prices dropping, buyers lap up the stories since they want to believe in them. This leads to decision paralysis among some buyers,“ says Rohit Gera, managing director of Gera Developments Pvt Ltd.
Fence-sitting is often the result of confusion rather than certainty. A buyer may have been receiving inputs from many different sources, some of which predict that property prices will come down soon. If they do, the buyer would have incurred a loss by buying too soon. If they don't, the buyer would have missed the optimal 'entry point', and certain flats which were shortlisted earlier may suddenly be off the market.“The biggest impact to homebuyers is that they continue to wait to purchase a home at the same time, continue to waste money on rent in their existing homes. In fact, only a miniscule minority can actually time any market to perfection and most people get left behind when the market corrects upwards. In many low sentiment markets, customers have been found to be left behind when the market turns suddenly. The dream home they had their eye on suddenly gets sold and by the time they find an alternative, the prices move up by a couple of hundred rupees,“ Gera adds.
Anil Pharande, chairman Pharande Spaces, says that the disadvantage of waiting too long is that the opposite of what is expected may (and often does) happen prices may rise rather than fall. “This is usually the case in markets where there is healthy demand for properties.Buyers may have taken the wrong kind of advice from people who do not understand how the local market is behaving, and what is likely to happen in the near future. The second disadvantage of waiting too long is that buyers may find that properties which they were keen on buying are no longer available,“ Pharande points out.
According to Arvind Jain, managing director Pride Group, the reasons why people who long to own a home do not take the plunge may be because they are confused by conflicting objectives and are looking at the whole issue of home ownership from an investor's viewpoint. Such a mind-set results in people either waiting for the right entry point (the lowest point to which prices will drop) or worrying about the non-liquid nature of property (gold or stocks can be turned into cash much faster if a financial crisis arises).Another reasons for buyer paralysis can be the expectations one has set with regards to the desirable size for a home. Since homes beyond a certain size are beyond their purchasing power, they plan to save until they have enough to make a sizable down payment.
Property, in a growing economy, always appreciates, just like gold does. This is an immutable rule of the market. It never does a complete about-turn to march in the opposite direction, though it will occasionally deviate from 'learned' market predictions. These are not corrections in the commonly understood sense of the term they are the minor course alterations that any market must undergo in order to adapt and stay alive. Whoever buys a house anytime, anywhere in India, does so with the knowledge that it is not only a place to live in, but a sound financial investment. If it were not so, India would be a predominantly renting nation like the US.
Akin to all mind-sets, the wait-and-watch syndrome can become a habit. The decision to postpone the purchase of a home should not be on the basis of limited information. Such a course could be self-defeating and put your dream home further and further out of reach.
“Developers will usually not come down on their asking rates, but they may offer discounts at the negotiation table to serious buyers. They may have a higher-than-anticipated holding capacity and sufficient sales volumes through negotiated deals, which makes it possible for them to hold on to their prices feasible to developers. The depreciating rupee has also caused NRI property purchases to increase in the larger cities, again making it possible for many developers with good projects to hold on to their rates,“ says Ashwinder Raj Singh, CEO Residential Services, JLL India.
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