Indian real estate consumers have given a thumb down to Budget 2012. In a post-budget snap survey on MagicBricks.com, 75% of the over 500 respondents believe that the Budget has not given enough to the real estate sector. An equal number of respondents were not happy with the government policies on infrastructure.
Rising interest rates have already reduced the power of purchase for most consumers over the last year. The obvious relief that the middle income consumer looked for from Finance Minister Pranab Mukherjee was whether he would do something to bring affordability back.
About 61% of respondents to the magicbricks.com survey believe that affordable housing is a major requirement to boost the sector. About 39% want an increase in affordable housing units, 23% were looking for increase in tax exemption limit on home loans and 21% wanted housing to get industry status.
Users articulated this dilemma on whether to invest in a house during GuruTalk, an online chat forum on magicbricks.com where eminent developer Niranjan Hiranandani advised users on property investments in the post-Budget scenario. His advice was “invest when the market is looking dull and sell when the market is looking bright.”
Hiranandani, MD of Hiranandani Group of Companies advised all property buyers that growing inflation and rising taxation have pushed up prices of real estate. “Don’t postpone buying a house. Buy one as early as you can and you will never regret it. Real Estate is a long-term opportunity and not for people who like to look at stock market figures everyday,” he added.
So what of the taxes and conditions that Budget 2012 has imposed? About 36% users recommended changes in interest rates on home loans. Even on GuruTalk, consumers have expressed their concern at rising interest rates affecting their buying decision. In another GuruTalk on magicbricks.com, J C Sharma, MD, Sobha Developers said that interest rates have clearly peaked and that the Reserve Bank of India (RBI) has clearly communicated that it would look at deduction of interest rates with inflation coming down and growth getting impacted. “The borrowers are taking loans on a floating rate basis. I strongly believe that in India, a borrower is not likely to pay an interest cost above 10% per annum during the life cycle of the loan period,” Sharma said.