While property price movement depends on multiple factors on a macro level and also is governed by multiple factors when it comes to specific properties and projects. Let's try to evaluate both these independently in this blog post.
I remember the times being part of real estate consulting back in 2006-2007, the mortgage rates dropped to around 6.5%, which is what they seem to be going currently as well. I also remember the kind of push this gave to real estate back then, it was amazing to see that every week the prices of property would change to a higher level, not just that, in some cases the prices changed even in matter of days. I also remember, all kinds of products being launched by multiple new players who never completed the projects and are nowhere to be seen now. Leading to sad stories of so many people who had put in their hard earned money into their dream home. It was like that people kind of had FOMO on real estate, every next person you speak to was investing and churning profits in a matter of weeks, days and months. And so many people, who just invested due to peer pressure regretted their decision later.
This phenomenon of lower mortgage interest rates is like a sudden wake up call to all the fence sitters who have been looking to own a property, but were unsure of the EMI affordability. In some cases, they would have liked a specific property, which did not fit their monthly EMI affordability and so the decision was postponed. Whenever the interest rates for home loans fall, there are two things that happen, firstly, the per lakh EMI reduces and secondly, the capital affordability becomes higher.
If the person had a specific property in mind at a certain price, it becomes affordable from an Monthly Outflow perspective. On the other hand, the Property Affordability goes up for buyers who know what EMI they are comfortable with and would like to stick to the exact same amount of monthly outflow. With the fallen interest rates, now their capital leverage becomes much higher and therefore they can afford a larger property or a more expensive property with the same monthly EMI. In both scenarios, the market definitely gets a boost.
Globally, this is one of the major factor that has always played a major role in how the property market moves. Having said that there are multiple other factors to consider. The first and foremost being the quality of location that you are buying into, the future promise of the location, the inhabitability of the location. Research has also shown that ready to live locations react in a very positive manner when interest rates fall. By ready to live, I mean locations that are here and now liveable and closer to the main downtown locations of the city.
While the macro pointers may point towards a growth in overall marketplace, however, the word of caution is to evaluate each location and then invest into a property, specially from a a point of view of insulating your investment against the price reversal trend. Lets take an example to understand this better, say you invested in a "Ready To Live Location" (In case of Gurgaon they being Golf Course Road, Golf Course Extn. Road or similar locations), not only will you enjoy the appreciation that comes with the boom, but also to a large extent you would be owning an asset that is less susceptible to a downward trend. The reason for this is that these locations irrespective of the market movement are always in high demand. On the other hand, if you would have invested in a far flung location, there are chances that your property would depreciate as much as it appreciated in the boom.
Ireo Skyon fits in very well with being a "Ready to Live" location, considering that it is right next to the epicentre of Gurgaon (The Golf Course Road). Apart from this, of course there are multiple other factors like apartments being "Ready to Move" and no scope for delays and unwanted surprises.
To sum it up, while macro indicators are pointing towards market moving up, however, one should use caution to chose the products they are investing in wisely.