The premium that one has to pay for a ready-to-move apartment in comparison with an under-construction one has narrowed across major markets in India throughout the year, prompting homebuyers to opt for completed real estate projects.
The GST of 5 per cent on an under-construction property on top of the stamp duty and registration fee against zero GST on ready-to-move apartments has also attracted more buyers as it means lower cost of owning a home.
Prices of ready-to-move residential properties are at a 3-7 per cent premium on an average across seven cities in India, a research report by real estate consultancy Anarock said, indicating that in some cases, buyers would gain if they check in to a completed project if total cost is adjusted with GST.
The difference in the average prices between the two classes of properties was 8-12 per cent in 2017 and 5-9 per cent in 2018, the study says while analysing the trends in Calcutta, Mumbai, Delhi-NCR, Pune, Hyderabad, Chennai and Bangalore.
The Anarock study points to prices of ready properties in Calcutta fetching only a 3.5 per cent premium on an average compared with the under-construction ones.
Industry observers say the fear of delayed delivery and apprehension about the quality of construction is also playing on the sentiment of homebuyers who are willing to wait till a project is completed.
As there is no apprehension about prices going up, there is no hurry to book an under-construction property. This also gels with the mindset to defer a big purchase because of uncertainty over a slowing economy, a city-based developer said.
However, the changing buying pattern is causing severe financial strain among builders as they are asked to dig deep into reserves or borrow heavily from the market to complete ongoing projects.
Moreover, as the focus of the builders shifts to complete ongoing work to ensure faster sales, launches have come down across markets.
Anuj Puri, chairman of Anarock Property Consultants, offered a different perspective.
“Perhaps the main reasons for the reducing gap is that
developers are reluctant to hike prices of ready properties amidst the overall slowdown. In a market scenario of limited housing sales, price hikes dampen homebuyer sentiments further. Ready unsold stock will not find many takers if the prices increase,” Puri said.
The reducing gap between the two classes of properties also works well for those living in a rented property.
Instead of paying both the rent and the pre-EMI for under-construction properties, ready apartments give freedom from rent.