Planning to buy a house? This is the right time

If you have been among those who have been waiting for the 'right' time to buy a home, now maybe that time. Interest rates have been falling, making your loan cheaper. Not just that, property rates have visibly started falling too. Wealth takes stock of whether it is indeed the right time to buy a home!

Property prices are falling

Project developers have been facing liquidity problems, thanks to the slowdown, and are finally cutting down prices. According to the December 2008 figures released by Knight Frank India Pvt. Ltd, property rates are down by 20-30 per cent from peak (that is mid 2008). Narain Corp, Property Consultants and Realtors, also estimate that rates have already gone down by 10 to 20 per cent since the beginning of 2009.

So have prices bottomed out? Sandeep Runwal, Director of Runwal Group, a Mumbai-based real estate company says, "In early 2008, property prices were unrealistically high but now rates have come down. We have reduced rates by 35 per cent. Bottoming of prices will happen quite quickly in the next two or three months."

Home loan are also getting cheaper

Interest rates have been falling steadily. Call money market rates have dropped to 2-3 per cent and bulk deposit rates have fallen sharply. This indicates liquidity in the system which would mean that interest rates are likely to come down a little more.

Many lenders such as State Bank of India (SBI), HDFC Ltd., LIC Housing Finance, etc. have reduced their loan interest rates. Bank of India is also expected to reduce its interest rates by 50 basis points. Then, have interest rates bottomed out?

Chairman and Managing Director of Punjab National Bank, KC Chakrabarty says, "Lending rates will come down by a maximum of 50 basis points."

Principal Economist, CRISIL, DK Joshi explains, "A further rate cut (by Reserve Bank of India) is expected in the next two to three months. There will be more action once the Central Bank announces the annual monetary policy by the end of April 2009."

Verdict: Should you wait or buy

Sanjeet D Narain, Managing Director of Narain Corp, says,"Prices would stabilise after another 8 to 10 per cent fall by July or August. So, if you are planning to buy a house, you can start looking out for one now."

Runwal also suggests that you will be able to acquire properties at more realistic prices in this current market scenario.

Calculate:

• Know your home loan rates
• Find out how residential rates have moved in your city
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