 "Tackling rising home prices: Research pricing, demand-supply for best deals")
When Rajesh Jha (name changed on request), a Delhi-based lawyer, went house hunting in Gurugram recently, he felt disheartened. Most apartments in prime areas were priced at Rs 3-3.5 crore and above, far above his budget of Rs 1-1.5 crore.
According to Anarock Research, the average residential price for the country’s top seven cities jumped 53 per cent between 2020 and 2024. If you, too, feel that house prices are rising beyond your affordability range, here are a few tips.
Hunting for a better price
Thorough research is key to negotiating a better price with a developer. “Find out what similar properties in the area are selling for and the incentives being offered,” says Rajkumar Singh, head of residential services (West), Anarock group. He also suggests negotiating during periods of slow sales. Understand demand-supply dynamics. “Knowledge of existing inventory, upcoming supply, and the rate of sale will improve your bargaining power,” says Pradeep Mishra, founder of Homents, a National Capital Region-based property consultancy.
Buyers with a limited budget should explore upcoming locations. “Refer to the government’s master plan and gather details of upcoming projects from reliable sources before investing,” says Mishra.
Opting for an under-construction property can also help secure a better price. “The developer’s trustworthiness is essential. Even under the Real Estate Regulatory Authority, delays occur and projects get stalled, especially in the case of smaller, under-funded developers,” says Singh.
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Better deals can at times be found in the secondary market. “But along with property price, consider the transfer charges,” says Mishra.
Assess what you can afford
When deciding your budget, consider the out-of-pocket expenses you will incur, and the EMI you can afford. Out-of-pocket expenses go beyond the down payment. “They include GST, registration fees, stamp duty, furnishing cost, loan charges, etc. If the base price of a house is Rs 1 crore, our estimates show the total cost can rise to Rs 1.32 crore. Since bank loans typically cover 80 per cent of the base price, GST, and utility charges, you would need around Rs 44 lakh upfront to buy such a property,” says Adhil Shetty, chief executive officer, BankBazaar.com.
Consider the EMI you can pay. “Estimate how much you can spare each month, factoring in unexpected costs and other financial goals,” says Arnav Pandya, founder of Moneyeduschool.
Maximising the down payment will make your EMI more manageable and reduce total interest outgo.
How much do banks lend?
Banks impose limits on how much you can borrow. Typically, they lend up to 80 per cent of the property’s cost—75 per cent for loans above Rs 75 lakh.
The amount approved also depends on your liabilities. “The bank may insist that the total of all your EMIs should not exceed 40 per cent of your income,” says Shetty. Banks also limit loans to 4-4.5 times the annual income.
Minimise tenure
Your loan tenure should end before you stop working. “Minimising the tenure will also reduce interest outgo,” says Shetty. He advises reducing the tenure further through prepayments.
Pandya suggests building an emergency corpus covering at least six months of expenses, including EMIs, to avoid defaulting if your income stops.