Switching To Tier II & Tier III Cities A Good Option For Real Estate

Union Finance Minister P Chidambaram has said the double digit inflation will continue for some more weeks.
The Central Government as well as the Reserve Bank of India is not going to hesitate in taking more steps to control towering prices, if the need arises with the markets also reacting adversely to the two major concerns – high inflation and oil price hike.
But one asset, which seems to be inflation-proof, is real estate, which is now starting to show signs of softening, particularly with banks raising interest rates and loans getting more difficult.
With possibility of home loans becoming dearer, this is still a excellent time to buy property. Property experts even say switching to Tier II and Tier III cities is a good option.
With the RBI raising repo rates to 8.5 %, one can expect a decline in property prices. Experts predict a further slide in prices of 5-10 % over the next quarter.
“If the sentiment remains the same, the mortgage rates go up, they would impact the demand as well as prices. There will be further drop seen in both.” Anshuman Magazine, Chairman & MD, CB Richard Ellis, says.
So a drop in demand could force property developers to bring down to prices to help increase demand. Many builders, especially in Mumbai, are now offering discounts to attract buyers.
“If you have a good location, some money, and a good developer, then you must buy now and not wait,” BP Dhaka, COO, Parsvnath Developers, says.
Residential property prices have gone down by 15-20 % in the past few months across the country. For consumers, this may be a good time to buy a property but yes, bearing that loan may become tougher
So, an informed decision may help you clinch a good real estate deal that is facing a price correction in several parts of the country.
Also, the options to move to Tier II and Tier III cities can also be considered. According to experts property prices will go down in these cities even more as compared to the metros.

One Comment

  1. Posted July 17, 2008 at 3:44 am | Permalink

    In the old India (pre 1997), there were hardly enough jobs to keep its people employed in Tier I cities. Therefore,Tier II and Tier III cities did not develop as alternatives to Tier I. However, in the last 5 years, many Tier II cities have gotten an impetus primarily due to IT/ITES companies relocating to cheaper locations in search of competitive RE and a less mercenary workforce eg. Pune, Mysore, Gurgaon, Chandigarh, Indore, Jaipur, etc.

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