Saturday, May 26, 2007

Rebates in slowing housing market

CNN-IBN reports

Mumbai: For the first time in years, there are signs that real estate market may finally be levelling off with property developers actually offering discounts.

Booming economy and high disposable income coupled with low interest rates had fueled the real estate boom in the last few years.

But the recent spurt in home loan rates is forcing potential home buyers to postpone their purchases and as a result builders are finding it difficult to find buyers.

"The volumes are nowhere near, what volume should be in this two months period. Because this is the best two-month period of the year when residential plots are sold in primary market. And that is where the demand has slackened to an extent, where even counting a percentage becomes very difficult," said Knight Frank Chairman Pranay Vakil.

Developers refuse to admit to a slowdown. And while no one is promising an outright discount, the buyer just needs to push hard as numerous freebies come tumbling out of the builder's treasure chest.

Hoardings in Mumbai offering various schemes are now becoming common in Mumbai and Thane. Developers are tying up with banks to offer lower interest rates.

So you might get a portion of your loan at just 8 per cent fixed and the rest at the market rate or save on stamp duty, which adds upto 5 per cent of the cost.

Builders say that confusion on whether to go for a fixed or floating rate loan is what is slowing consumer decision.

"They are happy with our offers but there is a confusion regarding interest rates. If they take fixed and if it moves down or if they take floating and interest rates move up, they will be in soup. So lack of stability in interest rates is preventing customers from taking final decision," said Swastik Group Chairman Raju Khetwani.

Experts say that if sales do not pick up by June, more discounts may be on their way. But a smart home buyer can get a good deal even now through some tough bargaining.

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