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Post By Mariya Panwala

Is Property Still a Viable Investment Option?

From the latter months of 2012 onwards, the phrase “The Real Estate industry is in the correction phase” became very popular. You could hear this on the TV, on the radio, read it in the newspapers, and in blogs as well. In short, “correction” in this context means that people realized that there wasn’t much scope for their Real Estate investments to appreciate over the next 10 – 15 years and they decided to not buy homes for the exorbitant costs they were selling at and instead chose to rent homes.

Real Estate correction also resulted in builders’ inventories not selling and just lying empty since the homebuyers and investors had moved away from outright ownership of homes. This is in sync with the general sentiment of next-generation investors, who like to opt for intangible investment tools like mutual funds and equities rather than tangible investments like gold and property.

Even with the Real Estate industry taking a large step in the positive direction with the regulation of the industry under the RERA Act (Real Estate Regulation & Development Act) of May 2017, data suggests that the industry has not risen from the correction phase yet. A recent research report by consultancy firm Knight Frank shows that home prices in eight major cities rose very tardily in the past three years. Overpricing, consumer disinterest, and industry duress were some of the reasons for this, it found.

So, is Real Estate a totally wrong investment option? It comes down to just one thing – whether you are going to buy property with a bank loan or not. If you need a loan for more than 50% of the total cost of the house, experts recommend you consider other forms of investments like ULIPs or SIPs, where you can invest with much lower amounts and immediately start building your corpus. The loan interest rates, legal expenses, and other expenses that come with a new house far overweigh the privilege of owning your own property and saving tax on home loan repayments.

Also read: 4 Finance-related Myths Finally Busted!

Due to the industry being in the correction phase, selling property is not as easy as it once was. Real Estate is not liquid, and selling your property is a procedure that takes close to half a year.

Be wise. If thinking of investing in property, think twice.

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