Banking professional Nikhil Kumar had been hunting for a house in and around Noida for over two years but everything seemed expensive. Like others, he had hoped that by holding off long enough, prices would drop and his dream home would be within reach. The slowdown in the real estate market did just that.
Kumar recently bought a two-bedroom house in Noida Extension, where prices have come down 8.3% to about Rs 3,300 per square foot from Rs 3,600 per sq. ft. in January 2014.
"Builders and brokers are willing to negotiate better deals today, which was missing some time back," he said. In Bengaluru, IT professional Farooque Sait latched on to the opportunity to buy a second home when he saw prices decline by about 5% over the past two quarters in the Yelahanka area.
Among the large number of people who are unable to buy their dream homes because prices are still too high or the economy is still weak, there's a growing tribe who are grabbing discounts offered by builders.
"Developers today are accepting buyer requests and are offering benefits. Whatever price correction had to happen has happened in different sub-markets depending on supply and demand dynamics," said Shveta Jain, executive director residential at property advisory firm Cushman &Wakefield.
Sample this: On the Noida-Greater Noida Expressway, Sector 150, prices have fallen by 12% in the past year, according to online real estate advisor PropTiger. com. Prices have dropped across the country, ranging from 17.6% in Omicron 3 in Greater Noida to 6.9% in Bachupally in Greater Hyderabad. The list goes on.
"Builders need cash flows and are willing to give discounts on close to finishing inventory. Pre-launches are also happening at aggressive prices," said Sandeep Kotak, managing partner at Mango Advisory, a consulting firm that advises developers. Builders are under stress because of rising debt, unsold inventory and slow new home sales across most places in the country.
"It's a buyer's market today. This is the best time for an end user to negotiate the best deal as the quoted prices have remained stagnant," said Samantak Das, chief economist and director of research at property advisory firm Knight Frank India.
People like Kumar were also emboldened after a series of rate cuts by the Reserve Bank of India, which led banks to start offering home loans at lower interest rate.
State Bank of India BSE 1.83 % now offers home loans to women at 9.7% and at 9.75% for others, irrespective of the amount. ICICI Bank BSE 1.35 % reduced its home loan rate to 9.85% for women and 9.9% for others. After the RBI's recent rate cut, some banks have reduced their base rates, which may potentially reduce the cost of home loans.
Experts said home loan rates will take a while to come down and this is a good time to buy because of the offers available.
"If a person wants to buy a home for end-use, then the right time is probably now " said Tanwir Alam, chief executive officer of financial advisory firm Fincart.
Builders are also coming out with innovative schemes for buyers. Supertech is offering a possession-linked payment plan at its Noida and Gurgaon projects that requires customers to pay 2% of the cost at the time of booking and take a loan for 80%, the EMI for which will be borne by the builder. After six months, 8% of the cost has to be paid and the final 10% is due on possession.
In Gurgaon, builders such as M3M, IREO, Mahindra Lifespace BSE 3.16 % and Lotus Greens are offering similar schemes with payment options varying from 30-65-5 to 30-70 and 30-40-30 to attract buyers.
"A buyer in Delhi, Mumbai or Bengaluru can today get a good discount - even 20% is normal - from tier-II and III developers or from developers that are developing large projects," said Ashutosh Limaye, head- research and real estate intelligence service at JLL India.
Sharad Mittal, director and head real estate investments at Motilal Oswal Real Estate Fund, expects disposable incomes to increase on the back of improving economic indicators and lower interest rates.
"With property prices expected to remain stagnant, this combination is an opportunity for home buyers," he said.