Primary or secondary market home buy? Check budget, risk appetite to decide

You may get a lower price in the secondary market, but you must be prepared for a high upfront payout

Residential property registrations have risen sharply — from 3.07 lakh units in FY2019 to 5.44 lakh units in FY2025, a 77 per cent jump, according to the Inspector General of Registration (IGR). A recent Square Yards analysis shows that 57 per cent (of purchases in FY2025) were primary market deals, while 43 per cent were in the secondary market. With prices rising rapidly post-pandemic, many buyers are considering the secondary market. They must assess the pros and cons of both options to determine which fits them better.

Advantages of the primary market

Buying directly from developers, particularly in under-construction projects, often yields good pricing. “Buying straight from the developer usually means you are getting in early, which often translates into a better price. There is good potential for the property’s value to increase as construction progresses,” says Vivek Agarwal, co-founder and chief technology officer, Square Yards.

 

Flexible payment plans are another key benefit. “Purchasing a house from the first-hand market opens up the potential for personalised financing options,” says Santhosh Kumar, vice chairman, ANAROCK Group. EMIs begin post-completion. Before that, buyers pay only pre-EMIs.

 

Newly built properties typically offer modern amenities, higher construction quality, and have reduced maintenance needs. “Since the building is newly constructed, the buyer is less likely to pay for repair and maintenance during the first few years,” says Karan Shetty, co-founder, Claravest Technologies. Buyers can also select layouts, interiors and fittings to suit their preferences.

 

Kumar highlights the protection provided by the Real Estate (Regulation and Development) Act (RERA) in new projects. “New projects also come with builder warranties,” says Amit Masaldan, chief revenue officer, Housing.com.

 

Agarwal adds that developers usually assist with registration and paperwork, which makes the process smoother.

Downsides of the primary market

One disadvantage of a primary market purchase is the goods and services tax (GST). “GST is applicable on under-construction property,” says Kumar. The rate is 5 per cent.

 

Agarwal highlights that ready units in new projects may be priced at a premium.

 

Market risk must also be factored in when buying an under-construction property. If the property is delivered during a downturn, the buyer’s returns could be hit.

 

Time is another drawback. “If the project is under construction, you may have to wait for one to three years before moving in. There is also the risk of delay,” says Agarwal. Delays can result in buyers paying both rent and EMIs for a considerable period. Kumar warns that in such cases, there is the additional risk of construction quality suffering as developers may cut corners to remain RERA compliant.

 

Many new projects also tend to be located in peripheral areas with poor infrastructure. 

Upside of the secondary market

Secondary market purchases can, at times, offer better pricing. “One can often get a lower price in the secondary market than in the primary market. Also, no GST is payable on these resale properties,” says Kumar.

 

The buyer has the leeway to negotiate the price. “This is especially true of situations where the seller is looking for a quick exit,” says Agarwal. A buyer could also get a better price in case of a distress sale. Kumar, however, cautions that secondary market properties in high-demand areas may command a premium.

 

Immediate possession is a major plus. Buyers can move in or rent the property immediately. “They can also satisfy themselves regarding its actual condition,” says Kumar. Buyers can inspect the amenities and overall upkeep first-hand.

 

Shetty stresses the advantage of purchasing in established neighbourhoods, which generally tend to have sound connectivity and social infrastructure.

Disadvantages of the secondary market

Buyers usually need to make the full payment upfront. “The EMI starts immediately if you take a loan,” says Agarwal. Many transactions also involve a large cash component.

 

Older properties may have limited resale value. “The older a property gets, the less resale value it tends to have, except in saturated but highly popular locations,” says Kumar.

 

Hidden defects can be a concern. “Detecting the less obvious or well-concealed defects could be difficult,” says Kumar.

 

Older properties may also require higher spending on maintenance and upkeep.

 

Legal clarity can be an issue. “Secondary market properties can at times come with legal ambiguities,” says Masaldan. This is especially true of properties that have changed hands multiple times.

 

Financing can be harder to secure. “Banks can be wary of lending against older structures or properties with unclear documentation,” says Shetty.

 

Modifications are often costlier. These properties may also not have contemporary amenities, and the interiors and fittings could be old-fashioned.

Choosing between the two

Budget is a key determinant. “Those on a tight budget can go for the secondary market, where they may have a chance to negotiate a good deal with the seller,” says Shetty. Avoiding GST is another plus. However, secondary purchases typically involve a higher upfront cost.

 

Kumar emphasises that primary market buyers benefit from staggered payment plans and easier loan access owing to lender-developer tie-ups. Primary market buys may also see better long-term appreciation.

 

Timeline matters. “Those looking to move in quickly should go for a secondary market purchase,” says Agarwal. Buyers seeking developed infrastructure should also consider the secondary market.

 

Risk appetite plays a role. Buyers with lower risk tolerance should opt for ready-to-move-in resale properties, while those comfortable with risk may consider under-construction projects.

 

Those seeking more choices or customisation should go for the primary market, as should buyers wanting RERA safeguards.

 

Before a primary market purchase...

 

* Ensure the project has valid RERA (Real Estate Regulatory Authority) registration; verify details on the state portal

* Evaluate the developer’s track record, including delivery timelines and performance of past projects

* Choose reputed developers, preferably Category A, to reduce the risk of project delays and legal complications

* Study the builder-buyer agreement closely for delivery schedules, penalties, cancellation, and refund terms; watch out for one-sided clauses

* Conduct legal due diligence on title, land ownership, approvals, and municipal and environmental clearances

* Check whether the property is in a developing area with upcoming infrastructure, job hubs, and social amenities, as this supports long-term appreciation

* Make sure the payment plan matches your financial situation

Before a secondary market purchase...

 

* Conduct legal due diligence to ensure a clear title: check for encumbrances, joint ownership and legal disputes

* Review key property documents such as the sale deed, previous agreements, and approved building plans

* Consider hiring a professional home inspector to detect defects in the property

* Research the local market to avoid overpaying

* Inspect the condition of common areas, amenities, and the overall upkeep of the project

* Evaluate rental demand and yield in the area if buying for investment purposes

* Ensure there are no pending loans, unpaid society dues, property taxes, or utility bills

* Obtain a No Objection Certificate (NOC) from the housing society or local authority to ensure hassle-free registration

(The writer is a Mumbai-based independent financial writer)