The deepening economic slowdown, rising cost of living and low wage revisions, coupled with higher interest rares, are forcing salaried professionals who had earlier invested in properties to put them up for sale, say industry experts.
People who had invested in properties some 10-15 years ago are now finding it difficult to service their home loans which have become too expensive now due to the rising interest rates and falling rental yields.
According to a survey, resale inventory has increased nearly 30 per cent over the last six months.
“Economic slowdown has hit the real estate industry. Salaried professionals who had invested in properties five-six years ago to cash in on the boom, are now looking to sell them as they are finding it difficult to cope with the high cost of living,” property portal Housing.co.in co-founder and marketing head Advitiya Sharma told PTI.-from TOI
Categories
2 replies on “Salaried investors forced to sell real estate”
A few observations here – Speculative investment in property (as an investment, not for self-use) by leveraging future income is much more likely to face the fate described here than –
a) Property purchased for self-use, where the burden of EMI (in view of rising interest rates) adjusted for the rents payable (in a scenario that one may did not purchase the property) is much less both emotionally and cash flow wise.
b) Property purchased 10-15 years ago as you suggest, will carry far less EMIs than the rents of similar properties presently prevailing – this scenario will apply to almost all locations, pan India. If there are exceptions, I would love to know more about them with specific details.
Having said that, it is true a number of salaried investors (speculators will be a more accurate description) have purchased multiple properties (mostly through loans) and in the emerging market scenario will find that the notional returns/appreciation that they were counting upon till a year ago, on thin ice at this juncture.
Buyers will be advised to look at buying property (for self-use, strictly) at reasonable prices (negotiate hard and be patient) irrespective of rates of interest on loans, and I say this because, the total cost of purchase of property including interest paid on loan is more sensitive to the actual cost of the property than the prevailing rate of interest (presumed to be floating). Also, during times of high interest rates on home loans, capital prices may fall, but rents are likely to increase as fewer people are eligible for loans.
Aren’t they lucky than the small/mid cap investors who are just trapped due to periodic call auction.
A regime change is the only hope for all sorts of frustrations of Investors.