Be an Opportunist: Invest in your Home amid this Corona Crisis | Agrawal Builders BLOG

Real Estate is believed to be one of the most stable investments. It symbolise one’s status and wealth within a community often. The significance of owning property as an asset has only increased with time. This won’t change, especially in a post COVID-19 scenario where the risks attached to buying stocks have increased. Similarly keeping savings in the bank now gives very low returns.Savings can very well get diverted to Real Estate with its proven track record for refunds.

Smart buyers during this lockdown period; invest their valuable time in searching, evaluating and narrowing down the choices for their dream home with credible and the best builders as enquiries have increased during lockdown and technology as always helping all such smart buyers to get the best deal.  

In the lockdown period and staying home for more than a month, people have understood the importance of buying a house and the safety it comes with. Architectural changes in home such as better ventilation, social distancing etc. will serve for recurrence of Covid 19 like situations. There is a demand of bigger homes as a smart home buyer would want an extra room to set up a home office to take care of work from home or a multipurpose room.

Going forward with uncertain times is our new normal but what would be a silver lining in housing? If we see the optimistic side of real estate sector, it always gives safe investment option with steady growth rate. Every calamity is an opportunity to scale new heights and real estate business will gain its momentum very soon.

Government is likely to incentivize the home buyers as real estate adds almost 7% to the national GDP.According to the International Monetary Fund, before the Covid-19 outbreak the Indian economy was one of the fastest-growing economies of the world.

The economy will revive & real estate sector will bounce back. COVID-19 will soon be nothing but a passing phase. The government of India is taking a series of proactive measures. Post COVID-19, economy will give a fresh start to the realty sector with greater intensity and vigour than it was in the pre-COVID stage. The falling prices of gold and crude oil in the current time further enhance the prospects for real estate.

Less Return on gold and fixed deposits– The interest rates of Fixed Deposits (FDs) are also on a downward spiral by every passing year and the prices of gold per 10 grams are not that attractive anymore.Banks slashed deposit rates manage their asset-liability position. Thus, returns of savers and pensioners are coming down.

Prices of gold per 10 grams Rs. 46,000 as on May 27, 2020
Interest Rates of Fixed Deposits (FDs) 5.1 to 6 % for various Banks.

Minimum Home Loan Rates–Reduced Repo rate by the Reserve Bank of India (RBI) is making way for sufficient liquidity into the market. Lower repo rate translate cheaper credit for loan seekers and helping potential Home buyers to raise funds and EMIs look more attractive than rent now.Therefore, post lockdown is an ideal time for smart home buyers to take advantage of the lower home loan interest rate, especially those who have been deferring buying decision.

BanksInterest Rate on Home Loan
(as on 27.05.2020)
SBI 7.35 %
HDFC 7.50 %
ICICI Bank 7.70 %
LIC Housing Finance 7.50 %

Moratorium period on Home Loan – Effective efforts by RBI will mitigate the economic impact of COVID-19 and maintain financial stability in the country.RBI has provided six months moratorium period on all kinds of loan (EMIs) till August 31st, 2020 which will help the borrowers in utilising funds for the priority activities and will not be counted for the purpose of calculating Non-performing Assets (NPAs).

Extended PMAY till March 2021 – The Government has extended the Credit Linked Subsidy Scheme (CLSS) component of the Pradhan Mantri Awas Yojana (PMAY) till March 31, 2021 for those with an annual income between Rs 6-18 lakh. The former deadline for the scheme was March 31, 2020.Extended CLSS will benefit the aspiring home buyers in the middle-income segment i.e. MIG-I and MIG-II.

Income (Annually) 6- 12 Lakhs 12- 18 Lakhs
Interest Subsidy/ Subvention 4% 3%

The last date for availing the scheme for the Lower Income Group (LIG) & the Economically Weaker Sections (EWS) is March 31, 2022.

Government provided Rs 70,000 crore stimulus package to trigger pace and activity in the real estate sector through the extension of CLSS is a critically important move which eliminates the uncertainty around the timelines for setting up the of construction of 50 million new housing units by 2022 through the PMAY. CLSS has benefited 3.3 lakh families till now and will create demand for another 2.5 lakh affordable homes.

Increased Tax Deduction Limit for affordable houses – Government had announced an increase in the tax deduction limit on the interest paid on purchase of affordable homes to Rs 3.50 lakh from the earlier Rs. 2 lakh during the budget and GST rate is already done to 1% for affordable homes and 5% for other under-construction homes.

Stamp Duty And Registration by June 30 on the old guideline only – In order to provide relief to the general public, promote economic activities and speed up real estate business, government of Madhya Pradesh decided to decrease stamp duty on registration of property from 9.5 % to 9 % across the state. With registration fees of 3 %, the total registry amount will be 12 % in select urban areas. It is valid for all types of registry in MP.

  Total Registration % (Old)Total Registration % (New)
Stamp Duty 9.5% 9%
Registry fee 3% 3%
Total 12.5% 12%

*Above collector guideline, additional 5.1% will be chargeable.

The state government has also decided to continue the guide-line year 2019-20 till June 30, 2020. This will result in a 5% reduction in the stamp and registration fees levied on the purchase of land / bungalows. It would help to recover from the adverse effect on the real estate business in the lockdown period.

Cost of construction for under constructed bungalows will now be calculated according to new guideline. It will also decrease the collector value of bungalows.

Cost of Construction (Old) Rs. 8000
Cost of Construction (New) Rs. 7600

Make In India Campaign – PM Modi’s ‘Self-Reliant India’ movement is here to support Make in India Campaign. It’s an opportunity for Indian businesses to increase the production capacity and give a thrust to this campaign. Investing in Real Estate is Investing in the growth of the country as Government of India earns a huge amount which is used in different types of developments. 

Based on today’s scenario, world is exploring other markets to procure raw material and decrease dependence on Chinese imports. With increased relegation of China by most of the countries of the world, India can become a favourite destination for investment and manufacturing companies as COVID-19 crisis has instilled an awareness of geography-specific supply chain challenges.India’s population and Human Resource is its biggest strength for FDI’s and FII’s to explore the Indian market and invest in it.

Non-Resident Indians– As Indian rupee value against the US dollar is falling, focus of investment has shifted to the Indian real estate market by NRI as it leaves them with more disposable money to realise investments back home.

We all must learn to live with this crisis and invest wisely in products with appreciating value and longer shelf life.In this uncertain times, market is certain that when the corona apocalypse subsides, smart home buyers will take the advantages of better priced deals, lower home loan interest rates and myriad incentives by the government.

Written By: Darshana Rathore

About Agrawal Builders: It is premium real estate developing firm in Bhopal  with a wide range of residential properties and beautiful amenities like modern club house, gymnasium, swimming pools, parks and garden, etc.

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