Why the Realty Market May Look Up

With both demand and supply falling, prices are more likely to find an equilibrium than a drastic fall. What this means basically, is that the real estate sector will most likely not experience freefall. But of course, there’s one last reason why realty should at the very least, continue at its sedate pace. We covered how the repo rate may lead to a lower home loan interest rate, but is interesting to note exactly how that works, especially from an investment perspective. Let’s say you want to invest in a house so you can rent it out and earn some passive income. A 3 BHK house will get a monthly
rent of Rs. 20,000/-, and cost about Rs. 60 lakhs. Let’s assume you get a home loan for 80% of that amount or Rs. 48 lakhs.

Now, in the current scenario, you can get that home loan at just 7.5% interest. This puts your monthly EMI, assuming a 30-year repayment period, just over Rs. 30,000. Subtract the rent you’ll be
getting and you’re basically paying just over Rs. 10,000 per month for your own home. This would not have been possible if the home loan interest rate were not so low. And surely, we are not the only ones to have done these calculations. There are bound to be many astute people out
there who have done these calculations and come to the same conclusion and are therefore, actively looking to invest in a home right now.

With three such effective and compelling reasons, now you know that the real estate market is unlikely to see a downturn and may, in fact, do the very opposite.