Buying Home in Economic Slow-Down

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Buying Home in Economic Slow-Down

What's happening in market?

The uncertainty is looming everywhere in the investment market. The world economy is not getting respite from the critical problems such as Euro crisis and series of recession. Indian financial market is also not spared from this grave situation. Recently credit-rating agencies have downgraded the country's rating and also lowered the frontline PSU and private bank's position. Investors are staying away from the investment market to avoid the risk.

Equity market is trading with lower volumes, and mutual funds are not getting fresh investments as well. Late monsoon has further added the concern of a slump in primary sector growth. In this scenario, many prospective home buyers who wanted to book a dream home are feeling puzzled and bewildered with the happenings. They are trying to assess the situation to proceed with a right decision.

Situation of Real Estate Sector

Inflation factor has resisted RBI to reduce an interest rate in recently concluded policy review. Negative vibes are flowing all over the real estate sector. Builders are trying to setoff the extra interest burden by increasing the property prices, but their sales are down due to lessen buyer interest due to such a high price.

Most of the investors are skeptical about investing in real estate because the developers are sitting deep into debt trap and the risk of default in possession transfer by the builder is at peak. This situation may not be true for all the builders, but the prospective buyers are very low in sentiment to come forward with a positive decision of buying a property. It is very important for the property buyer to analyze the situation correctly and reap the benefit at the right time with a correct choice.

What should a property buyer do?

This is a best time for the buyers to target a suitable property and start choice and price negotiations with the builder. High input cost in real estate and economic slow-down can help a property buyer to break a better deal with developers compared to the past.

Though an interest rate has not been corrected as anticipated, but it is still expected to correct in near future gradually as the inflation pressure should ease with good agricultural productivity if monsoon supports. So, this is a good time to buy a home of own choice without any pressure of builder to take the leftovers.

Once the interest rate is reduced significantly, then builders will be relieved with the current financial crunch; buyers will also rush to buy the property with reduced interest rates and hence benefit of choice will go away. The slow-down is not there to stay forever, but one who buys a house wants to live in it for the complete life so, a wrong choice due to present situation can spoil the future.

The price of a real estate may or may not correct significantly in coming days, but it is definite that better choice and fine quality of property that is available in this market at this period would go away swiftly as the situations improve gradually.


Before buying a house, it is very important to enquire about the status of builder to avoid possession dispute or problems associated with the economic slowdown. A ready to move flat is always better than buying one in an ongoing project to avoid any future problem.

It is also important to understand the limitations related to choice of locality, budget and size to opt a best-suited property. If the house is not as per choice, or it is in a locality you avoid staying in, then no matter how good is the deal, it is worth avoiding such a buy.

The present economic condition has forced the developers/builders to come over a negotiation table with buyers to offer better choices but not to compromise on prices because of high input cost with a low sale. So it's a good time to buy a house for all those prospective buyers who want a dream house with a priority of choice where price being a secondary issue.

Read more about: economy, investment
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