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Top Reasons Behind the Slump in the Real Estate Industry

By Finserv MARKETS - Dec 3,2019
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Top Reasons Behind the Slump in the Real Estate Industry

A recent survey conducted by the Federation of Indian Chambers of Commerce & Industry (FICCI), Knight Frank, and the National Real Estate Development Council revealed that investors are currently feeling uneasy about the Indian real estate market. Today, investors are demotivated to invest in real estate due to multiple reasons, which is the primary reason behind the slump in the industry.

Some of these reasons are explained below:

  • Unattractive return on investment

Currently, investors are not getting more than 2-3% return on investment (ROI) even in cities where the real estate industry is doing comparatively better. In some cities, the returns are negative. This has been keeping investors away from the real estate market.

  • Economic slowdown

The current economic slowdown has created a crisis in the job market, which has made it harder to find a new job. Hence, people are preferring to hold on to their savings instead of investing it in real estate. However, if you do need to buy a home right now, the affordable Bajaj Finance Home Loan can help you avail a loan at a competitive interest rate.

  • Under-construction plots are failing to inspire faith

There was a time when under-construction properties were preferred by Indian buyers because of their competitive pricing. This scenario has changed as investors are now scared to put their money into projects that might take a lot of time to be completed. Interestingly, this has resulted in even more delays in the completion of said projects as builders are falling short of funds.

  • People are waiting for the price to drop

The only way this current scenario can improve is if people start investing money in properties. However, they are choosing to wait until the prices drop. It is quite understandable that they do not want to put their money in a property that they believe might lose its value in a few years. Hence, people are waiting until property prices become more reasonable so they can get an affordable home loan.

  • Low loan-to-value (LTV) ratio

Until some time ago, you could get 90% LTV was allowed only for loans up to Rs.20 lakh of the property value from the bank. However, today, RBI allows a loan-to-value ratio (LTV) of up to 90% for home loans of Rs.30 lakh or less. As such, new home buyers now have to pay 30% of the property value from their own pockets. This is one key reason as to why people are now showing less interest in buying homes.

  • Other investment options

With the slump in the real estate market, people are now considering newer investment avenues such as mutual funds. They have also started to invest in start-ups as they can generate higher returns.

It is understandable if you are in two minds about investing in real estate. It surely requires thorough research and some risk-taking tenacity. However, the availability of loans at affordable interest rates and easier options for prepayment of home loan with Finserv MARKETS leave you with enough room for reconsideration.

Connect with us at Finserv MARKETS and enjoy a home loan up to INR 3.5 crore. We require minimal documentation, ensuring that the process is hassle-free. You can get a quick approval with an online loan application. You also get an insurance cover, in case of an unfortunate incident, you can protect your loved ones from the burden of paying off your home loan with customized insurance plans. Home loans at Finserv MARKETS provide complete transparency with no hidden charges, no dubious policies. Before availing a home loan also check if you are eligible for pmay to get lesser emi on your home loan only at Finserv MARKETS.

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