Buy Property in Mumbai

If you are looking for the best time to buy property and you are looking for the indicators in real estate market such as; price and sales, so you can say that in many cities property market could be head for a revival. As per the reports of RBI, the average prices of residential units have increased by 13.7 percent in 10 major cities of the country in the period of July to September 2015. If we will see the brokers sales reports, so we can easily say that sales in real estate market have got a boost too.

According to one of the most reputed developer, “We are going for the pre-launch of our project because buyers are lined up outside of the office to book a flat. And at this point of movement we are expecting some good sales and price in near future”. According to statement of Sanjay Dutt, MD of Cushman & Wakefield, India, “It doesn’t mean that in near future real estate market will witness a turnaround, but it is expected that the trend will sustain for the next 6 to 8 months and we can call it revival”. The more he added that there are contradictions in the data as there are many launches in real estate market where buyers and investors are frenzy to buy. In past few months office and commercial demand has picked up, which means city is creating new job opportunities and if it will sustain for next few months so there will be a turning point for the industry.

Why it’s good time to buy property?

According to real estate experts, if you are end user, so it’s good time to buy residential property. As per the statement of A S Sivaramakrishnan, Head of Residential Services at CBRE South Asia, “These days smart buyers are already scouting for a property, as these days realtors are still flexible with the demand of buyers”. In Mumbai there are more than 77,000 apartments are in the inventory, as per reports of JLL India and it is expected that it will take 11 to 12 quarters to clear off that inventory against a healthy expected cycle of 5 to 6 quarters, as per the statement of Ashwinder Raj Singh, CEO of Residential Services at JLL India. The more he added that there are chances that developers will not raise up their prices if the sales pick up because it can make buyers uncomfortable.

Apart from that there are some developers in city which are offering flexible payment option with attractive interest rates, but they are aiming to sell houses at little higher price than the rates prevailing in those regions. Ashutosh Limaye, Head of Research at JLL India, Don’t just go by the quoted rate of the flat because developers might offer little lower priced with some additional charges such as; club fee, and fee for other amenities. Apart from checking the track record¸ titles and approvals, its recommended to check the discounts, offers and schemes for different real estate developers before making any kind of purchase, as per the statement of Mudassir Zaidi, National Director of Residential Agency at Knight Frank.

If you are looking for the under-construction flats, so its recommended to take some time and evaluate the projects and ideally buyers should take 30 to 60 days to visit the site and check if the construction is happening as per schedule or not. If there is any kind of deficit, then better to stay away from that project. However; buyers can find the good deal for old flats, which was constructed 5 to 10 years ago. Apart from that if you are at real estate investor, so better to wait and watch for the trends and developments for next two to three quarters.

Housing Price Growth in Mumbai

For the duration of July to September or in Q3 2015, the housing price index grow by 13.7 percent, whereas; the cities such as; Jaipur, Lucknow and Kolkata have contributed to the slower pace of growth, as per data and reports of RBI.

As per data of Reserve Bank of India, till the end of July – September quarter home prices have not bottomed out. Indian Housing Price Index is the barometer for home prices in Indian real estate market and it released by the central bank. For years 2015, the Indian Housing Price Index has grown by 13.7 percent for the period of three months, which ended on September 2015, however; in last quarter it was 14.5 percent for the same financial year. On the other side it was city Kolkata, which has witnessed maximum fall in Indian Housing Price Index with 224.1 in the second quarter of 2015-16 and it was 3.13 percent less than the previous quarter. But New Delhi, the capital city of country have cheered the real estate developers because in Delhi real estate developers were offering freebies such as; free parking space, air tickets, cars, heavy discounts and more including latest gadgets. For the same period the Housing Price Index growth was about 21.9 percent in Delhi and it was maximum in whole country.

Overall increase in Indian Housing Price Index was 219.5 in the second quarter, however; in first quarter of 2015 it was 215.3 and this increase was due to the metro cities such as; Delhi, Ahmedabad and Chennai, as per press release of RBI. Whereas; in Q2 2015, the Housing Price Index for Bengaluru, Kolkata and Kochi decreased from the previous quarter. To give more curate data the Reserve Bank of India compiles quarterly house price index of top ten major cities such as; Mumbai, Bengaluru, Lucknow, Delhi, Chennai, Ahmedabad, Jaipur, Kolkata, Kanpur and Kochi.

Home loan in india

We all know that most of us prefer to take home loan to buy home, but when it comes to transfer of Home Loan Balance, so only few us know about these kinds of options. Home Loan Balance allows the browsers to get benefit from a downward movement in lending rates, however; lending rates change as per the market conditions. New Year is about to come and its perfect time to start something new and do some exciting shopping’s to celebrate New Year with new zeal and excitement. On September 29^th 2015, Mr. Raghuram Rajan announced that RBI is cutting the rates and it will allow some of the banks to follow the same and lower their lending rates, so that loan browsers can get certain benefit. It is expected that this announcement will add some more cheer to the home loan market and it will attract the new buyers in the reality sector.

Like Mr. Sharma there are some buyers in market who already has a home loan which is at a higher rate and they are not getting any kind of benefit from these lower rates. But his one of the friend suggest that he should explore the option of home loan balance transfer as it will allow him to take the advantage of the lower rate regime.

What is Home Loan Balance Transfer?

Home Loan Balance Transfer is just options which allow you to get benefit from the downward movement in the lending rates as we all know that lending rates are subject to change as per market conditions. Sometimes floating interest rates can be much lower than the previous and it depends on the banks whether to transfer benefit or not, which means new home loans can be available at lower rates than previous. If you will opt for the Home Loan Balance Transfer option, so the entire principal amount of the loan will be transferred from your old or existing bank to a new bank and in that case if your old bank is not passing the benefit of lower interest rate, so you can avail that benefit with new bank, but before transferring home loan make sure that banks is ready to transfer the benefit of lower interest rate. However; as customer you will subsequently pays the EMIs to the new bank at the new rate.

You will get the benefit from Home Loan Balance Transfer or not?

Now the most crucial question; You will get the benefit from Home Loan Transfer or not? As procedure is complex, so there is no clear answer with “Yes” or “No” because Home Loan Transfer can be benefited with certain terms and conditions because in some cases even if bank is offering the lower interest rate, so it could not be the economically viable to transfer a home loan, if your savings are not enough to justify, effort, time and cost. However; in simple words there are some factors which can help you to get answer that decision of Home Loan Transfer of good for you or not?

1.  Amount of Outstanding Principal
2.  Total Cost of Home Loan Transfer
3. Your Remaining Loan Tenure
4. Time and Effort

Cost Involved in Home Loan Balance Transfer:

 If you are wondering that how much money it takes in Home Loan Balance Transfer, so when you transfer a home loan the cost involved processing fee, pre-payment penalty and some other charges such as; stamp duty and more as per banking policies. However; most of the banks prefer to waive off the pre-payment penalty as RBI and NHB discourage banks from charging it but other charges are unavoidable. Apart from that the total savings can be determined after calculating the total cost which is involved. On the other side remaining home loan tenure is also another important factor and if there are less time in the loan tenure, so it might not be worth to put the effort for a home loan transfer. However; if the loan duration is long, so the cost can be adjusted in the form of savings with remaining loan duration else the cost burden will not be justified.

In certain cases it is obvious that if you have bigger outstanding principal so it is better to go with Home Loan Balance Transfer as you will be able to save more, but keep in mind that loan transfer such as; new home loan will also take a lot of time, documentation and other efforts and if you are professional so you can also measure these things in monetary terms. You will have to research which bank to transfer the loan to, liaison with your bank and the new bank, get documentation in place, and submit applications and much more.

 Conclusion:

If you are thinking to take the benefit from Home Loan Balance Transfer, so before approaching another bank you must check that your existing bank is willing to reset the rate or not because there are some banks which prefer to negotiate. If the market conditions warrant that most banks would be willing to retain their customers and re-negotiate the loan rate. Even if your existing banks is offering little lower interest rate than previous and it is not much lower than the what competitor is offering, so transferring will not make much sense as it will involve processing fee, pre payment charges and a lot of time and effort.

It is recommended to explore the multiple options of a home loan transfer as it can be benefited for you in certain terms and conditions, however; before making the final decision you can also take the help of experts or you can do cost benefit analysis by yourself.

TREDA’s three-day property show

The effect of a cut in home loan interest rates by RBI last week was palpable at the Telangana Real Estate Developers Association’s (TREDA) Property Show. The exhibition which concluded at Hitex, Madhapur on Sunday, was a big hit with more than 70,000 prospective home buyers visiting it.

“This is the sixth time we have organised a property expo and the response was more encouraging than before. We received serious enquiries from buyers visiting the show. Builders and realty companies have got many registrations,” said an enthusiastic K Sankara Rao, a builder and secretary of TREDA.

I have been enquiring about various apartments and projects for eight months around Miyapur and the property show has really helped me. Also since the interest rate has been reduced, we will expedite our decision,” said Rajesh Reddy, a teacher from Miyapur. “

Even the rains could not dampen the spirit of enthusiastic visitors who were spotted going round the stalls, making inquiries and collecting brochures and other publicity material on properties hosted in the show. Bankers were flooded with queries on home loans and the new lending rates.

Image Credits : DNA

Are you a Non-resident Indian who has invested in Indian real estate market expecting a good return? Then you should understand the pros and cons of repatriating the money back to your country without any hassles.

Remember, the planning should be done before you decide to make the purchase rather than during the sale of the asset. We have listed down some important aspects an NRI home buyer should be familiar with.

Repatriation of the Principal Amount invested

Funds held in any overseas account and brought in India via bank transfer to make payment for the purchase is one aspect of ‘principal amount’. Another is through funds already parked in his NRE (Non-resident external) account, which, via drawing to a cheque can be paid to the seller and will be considered in the principal amount. This principal invested can be repatriated back to his foreign country in the foreign currency without any restrictions and permission from RBI. This also does not have any upper cap on the amount. However, this is applicable for a maximum number of 2 residential properties plus an unlimited number of commercial properties in the lifetime of the NRI investor.

Restriction

From the 3rd property onwards, even this principal portion has to be deposited in an NRO (Non Resident Ordinary) account of the NRI, of which a maximum of USD 1 Million (approx Rs.6 crore) can be repatriated for every financial year to the overseas bank account.
Property bought wholly with funds in Indian NRO account

The entire proceeds from the sale of the property including principal and profits must first be deposited in an NRO account and then a maximum amount of USD 1 Million can be repatriated per financial year.

Some funds lying in NRO account and fresh foreign currency remitted from abroad or from balances existing in NRE/FCNR accounts

The respective rules explained above apply in proportion of funds invested; which means that the principal invested out of the NRO account can be repatriated only to the extent of USD 1 Million per annum and the principal invested from external sources or NRE/FCNR funds can be repatriated fully without any limit at one go but subject to the restriction on number of residential properties.

A qualified chartered accountant should certify the amounts invested in the property purchase, which can be corroborated with the bank statement reflecting those transactions. Understand the taxation matters with regards to short term & long term capital gain from your CA before deciding when to sell the asset to ensure maximum return on the investment. Taxation laws of the foreign country on the amount invested in India also need to be carefully considered.

Get new home this festive season

Buying a new property was hitherto out of reach for home buyers given the peaking real estate prices. The demand for realty therefore, has been stagnating. Despite this, no attempts to review prices have been made to lure buyers to the market again.

According to RBI Annual Report, the number of unsold properties have not only increased but there has also been a fall in number of new launches. The real estate sector has 48 months worth of unsold inventory which is very high. However, instead of lowering prices, they depend on the Central Bank to reduce interest rates.

Industry body Assocham, in a recent survey indicated that the residential market in Delhi-NCR is trapped with an estimated inventory of 1,70,000 units, while  data compiled by property advisory JLL India and Confederation of Real Estate Developers Association of India (Credai) shows 77,460 residential units across Mumbai, Thane and Navi Mumbai are lying unsold.

Realty experts opine that in order to clear the huge backlog, there is a scope of easing property prices especially in Mumbai & the National Capital Region.

With the festive season round the corner, developers are already providing different schemes and attractive discounts on residential properties. A further 10% discount or price correction on an average is expected in the market, states a report in the Asian Age.

While the RBI Governor Raghuram Rajan in the SBI Conclave highlighted the need for lowering realty prices to stimulate demand, Navin Raheja, the Chairman & Managing Director of Raheja Developers believes that any further price cuts are not likely.

RBI: Inflation for housing price declines

Recently RBI announced that Housing price inflation has on its 4 years low and it is on the 4 per cent. The more they added that the housing price has risen by more than 60 per cent in last four years however; Jaipur record the highest price growth which was of about more than 78 per cent.
All of these findings are based on the survey of RBI, which was covering the all data on the transaction level which was distributed for the housing loan in all the 13 major cities from 35 scheduled commercial banks as well as the housing finance companies. As per the statement of RBI, the Indian housing market has witness the upward trend in prices in last four years with the steady rise in Residential Property Price Index (RPPI) which was increased from 107 of 2010-11 to 172 of 2014-15 and it was more than 60 per cent. Jaipur recorded the highest growth whereas; there are also few cities which were recorded the lowest growth such as; Hyderabad and Greater Chandigarh as it recorded the less than 40 per cent growth.
Housing price inflation which was measured by RPPI in terms of annual growth was on its peak in 2012 to 2013 and in recent period it has declined. The survey of RBI revealed that the inflation of housing price has increased by the 4 per cent in 2011 to 2012 and it was almost 28 per cent in the 2012 to 2013 in the third quarter. The annual growth of CPI-Housing Rent Index and housing price index is same in the last seven quarters as per the statement of central bank. It was observed the in FY13, the house prices index was at a higher rate and it was more than the housing rent. Whereas; on the other side house price inflation as well as the housing rent inflation was moved higher in terms of price.
In survey it was observed that the trend was in median Loan-to-Value in the last quarter was indicating that banks are sanctioning the housing loans. LTV ratio is the macro-prudential tools which were used by the banks to control direct exposure to decline the house prices. Apart from that RBI has prescribed the upper limit of more than 80 per cent on LTV for the housing loans which was more than the Rs 20 lakh and in present more than 90 per cent housing loans is more than Rs. 20 lakh. While coming to the median EMI-to-Income ratio as well as the median Loan-to-Income ratio and median House Price-to-Income ratio, they didn’t indicate the any kind of notable variation in the housing affordability in last quarter.
The EMI-to-Income ratio is the effective measures of affordability of housing loan and the borrower whereas; it was the main portion of gross monthly income that is paying the monthly EMI. Recently, RBI has initiated the information system on housing prices and hosing rent through this survey. Whereas; the property price data used in the analysis was appraised by bank and housing finance companies.

Property prices to be stable in Mumbai

Stable price scenario can be expected for property prices in Mumbai in the foreseeable future due to the high price points. However, Bangalore, Chennai, Pune, and Kolkata may see marginal appreciation due to increased demand.

In second quarter the union government had announced friendly measures in the 2014-15 budget for real estate sector. With the general improvement in overall sentiment and optimistic announcements for real estate BSE Sensex and the realty index showed upward trends.

What is termed as a positive move, the Reserve Bank of India (RBI) allowed banks to issue long-term bonds with a minimum maturity of seven years to raise funds for lending to long term infrastructure and affordable housing projects. Home loans up to INR50 lakhs (INR5 million) for houses costing up to INR65 lakhs (INR6.5 million) located in the six metropolitan centres and INR40 lakhs (INR4 million) for houses costing INR50 lakhs (INR5 million) in other cities are eligible for home loan under this scheme.

A rise in transaction volumes was witnessed in cities such as Bangalore, Chennai and Pune and a number of projects were launched. In cities such NCR, Mumbai and Kolkata, there was an increase in enquiries for residential properties but transaction volumes remained stable and developers continued to promote their unsold stock by offering innovative payment plans. “We anticipate a stable price scenario in cities such as Mumbai and NCR due to the high price points. However, Bangalore, Chennai, Pune, and Kolkata may see marginal appreciation due to increased demand. Most of these cities may witness the launch of affordable projects in the coming quarter as a number of developers are planning to launch affordable housing projects in line with the government agenda focusing on this type of housing.

Reserve Bank of India has expressed concern over high exposure of banks to infrastructure and real estate sectors. RBI Deputy Governor R Gandhi cautioned lenders saying they “cannot put all eggs into one basket”. As an alternative, the deputy governor suggested looking at corporate bonds market, which is being encouraged by both the central bank and the government. “Together, the real estate and infrastructure sectors account for 25 per cent of the total credit exposure. We are very much concerned about further exposure by banks into this segment,” Gandhi said while addressing a capital markets summit, organised by industry lobby Ficci here. “Banks cannot put all eggs into one basket. When they have already reached 25 per cent, naturally they will have hesitation to increase it further. One cannot overexpose to one segment or sector,” he told reporters later. Gandhi said that RBI considers real estate as a “sensitive” sector because of asset bubble fears. He said housing credit has grown from Rs 2.60 trillion in FY08 to Rs 5.40 trillion in FY14, while the same to commercial realty has grown from Rs 60,000 crore to Rs 1.54 trillion during the same period. For the infrastructure space, the same has grown from Rs 2.06 trillion in FY08 to Rs 8.40 trillion at the end of FY’14, constituting about 15 per cent of the system. “In terms of proportionate allocation, to expect banking system to be supporting these two sectors much beyond this would be a bit tall. That is why we need to be looking at sources beyond the banking sector,” he said, adding, corporate bonds would be a good alternative which the banks can look at. It can be noted that due to issues like the asset liability mismatches, RBI and policymakers have for long been trying to push alternatives like the corporate bonds to raise long-term funds. Steps to allow banks to issue long-term bonds in July this year were a part of the same design. But so far corporate bond market could not make a mark in the market primarily due to dominance of the government bond market. Meanwhile, Gandhi said the RBI will be coming out with a discussion paper on group exposure limits by banks in November or December. He also said banks have requested for an extension for the practice of restructuring beyond 2015 and the RBI is examining the same. Gandhi said the RBI will be coming out with final guidelines for small banks and payments by end-November and with draft guidelines on ‘on-tap’ licensing after that.

The world has truly become a global village! If you have got some disposable amount, you can even own a real estate asset in any country of your choice.

What looked impossible earlier is now possible as the Reserve Bank of India (RBI) allows resident Indians to remit money abroad for the purchase of immovable properties.

As per the new RBI directive, banks are allowed to remit up to US$125,000 (around Rs 75 lakh) every financial year for any permitted current or capital account transaction, or a combination of both. The money can be used for purchasing immovable property outside India.

Finance wizards point out that the new norms might be helpful for the state as it would be easier for you to spot properties due to their significant overseas connection. “The RBI’s decision to allow resident Indians to acquire immovable properties outside India is encouraging. Real estate has always elicited immense interest among Indians. So, relaxation of the norms will encourage them to remit more money outside the country.

This measure will also help strengthen the Indian economy as the income from such properties will then find its way back to the Indian economy regularly, adding to the foreign exchange reserves,” said Promoth Manghat, vice-president, Global Operations, at UAE Exchange. The Liberalised Remittances Scheme (LRS), notified by the RBI, allows residents to acquire and hold shares, debt instruments or other assets outside India without the prior approval of the RBI. In August last year, the RBI had reduced the ceiling from US$200,000 to US$75,000 per person in a financial year.

“Real estate prices are yet to revive in many parts of the world, except in a few places. The new RBI norms came at the right time. People who have a considerable amount of disposable money, can now look at foreign countries to buy properties,” said G Sanjeev Kumar, financial advisor and managing director at Progno Financial Planning Systems Pvt Ltd.