best time to buy a property

Why 2019 has Turned out to be the Best Time to Buy a Property

Hyderabad-based businessman, Rajnish Tripathi has been tinkering with the thought of buying a property since December last year. He wanted to make sure that he invested when the time was right. It was when his friend and tax consultant, Senthil Srinivasan, convinced him that the property prices are more affordable now than at any time in the past five years, he decided to make the move to buy a property of choice.

Not just for Rajnish, this is a good time for anyone wanting to buy a home or invest in a property. With major reforms, affordable loans, realty-centric announcements in the Interim Budget, and the real estate sector being granted the ‘industry status,’ the market condition for buyers is just right. Plus, the significant rise in employment levels and annual household income are also boosting the demand for residential properties.

That said, let’s look at some of the prime reasons why 2019 has turned out to be the best time to buy a property.

RERA — A Revolutionary Policy Transforming the Indian Real Estate Market

The Real Estate Regulatory Authority (RERA) Act has ushered in improved accountability and transparency in the real estate marketplace. RERA, stipulating a deadline for the completion of projects, has forced developers to revisit their business models. Since RERA’s implementation, real estate players have shown seriousness in terms of project completion. This has increased buyer confidence to a great extent. With the RERA in place for over a year, the market has seen a surge in demand for all real estate categories, be it ready to move in homes, under construction properties, or newly launched units.

In West Bengal, HIRA (Housing Industry Regulation Act) is applicable. HIRA has dramatically improved transparency in the Kolkata property market and property buyers have improved confidence to buy a property now.

RBI’s Repo Rate Cut by 25 Basis Points

To energize economic activity, the RBI, in its first bi-monthly monetary policy meet for FY 19-20, slashed the repo rate by 25 basis points (0.25 percent) to 6 percent. The RBI’s decision to cut interest rates will make home loans cheaper as banks are expected to pass on the benefit to the end buyers.

Thanks to this, new borrowers could bag a good home loan deal at reduced interest rates. Existing borrowers may enjoy this rate cut if their lenders are ready to restructure the loan in line with RBI’s rate slash. Some banks and housing finance companies have already reduced home loan rates.

There is no doubt that we will see a further reduction of interest rate and home loan EMIs will be lower as and when that happens.

Tax Savings on Capital Gains

In its Interim Budget 2019, the government announced that individuals can save tax on capital gains from property sale by investing in two residential properties. Previously, Section 54 of the Income Tax Act, allowed taxpayers to invest in one residential property, instead of two, as now proposed in the Interim Budget 2019.

Individuals can, however, avail the benefit of the capital gains rollover once in a lifetime, with a capping of up to Rs 2 crore. The decision, welcomed by the real estate industry, provides middle-class taxpayers a reason to rejoice.

Removal of Tax on Notional Rent for Second Self-Occupied House

Because of children’s education, job requirements, or accommodating parents, maintaining two properties is common these days. Noting this, the government, in its Interim Budget 2019, proposed an exemption of income tax on notional rent on second self-occupied properties. As of now, an individual had to pay tax on notional rent if he/she had more than one self-occupied house.

GST Council’s Reduction in GST Rates

The GST Council recently made a cut in the GST rates on properties with effect from April 01, 2019. As per the new rates, the government will levy GST at 1 percent for affordable housing, instead of 8 percent, and @ 5 percent for regular units, instead of the current 12 percent.

Moreover, the Council has also revised the size of what should be considered an “affordable home”. Previously, for a house to be qualified under the affordable housing segment, the limit was a uniform carpet area of up to 60 sq metres. Now, in order to qualify for affordable housing, the total area of the residential unit will need to be 60 sq. mt. in metropolitan areas and 90 sq. mt. in non-metropolitan regions. For both metropolitan and non-metropolitan areas, the price of the property should be below Rs 45 lakh.

Industry experts believe that the GST rate cut and the revisions in the affordable housing scheme is likely to drive demand for under-construction projects as well as new projects in the affordable category.

PMAY Benefits Extension

Benefits under Prime Minister Awas Yojana was recently expanded with higher inclusion of eligible homebuyers. The maximum carpet area of the eligible homes was increased and the scheme was extended till March 31, 2020. Now is the opportune time to take advantage of the PMAY Credit Linked Subsidy Scheme (CLSS) benefits.

At this point, real estate in India is a predominantly buyer-centric market, therefore, make the most of it. If you are planning to buy a property, this is the time to make the move and grab a great deal. The market conditions may not remain the same so don’t let this chance of buying your dream home slip through your fingers!

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