Investment is a tricky business. All the speculations and planning might go wrong if business is dependent on the consumer’s behavior. One such business is real estate business. From the outset, investment in real estate business seems like a win-win situation. Reasons being land value never depreciates and the demand for houses, land and domestic and commercial properties are always on the higher side. With the ever increasing population the demand for a house always has an upward trend.
But the bubble got burst and in the last one decade and many investors had to suffer heavy losses. Many buildings are still under construction and people are not ready to buy houses. Cost of the houses started getting sky rocketing and with high interest rates customers started retracting from buying houses. What were the reasons for cost of the houses going so high? There are many factors, like model house cost being included. Yes, this is a well kept secret of real estate investors and builders. One of the factors of cost of the house is also the model house that is built to show to the prospective customers. The cost of a model house is the same as the house that is built for the customer the only differentiation is that it cannot be sold and has to be demolished later on.
But has anything changed in recent past for investors becoming interested in investing in Real Estate business? Yes, the biggest differentiation is the GST bill or the Goods and Services Bills. This bill can become a major player in reducing the cost of building a house. Yes a lot of changes are foreseen. Manufacturing cost is foreseen to be decreasing due to one tax being levied on raw materials (like cement, brics etc) and the market is showing positive signs. Although it is too early to predict but if the GST tax is lesser than the overall tax levied now then the cost of the house will go down considerably and there will be more buyers for the houses. How is that possible? At present there are multiple taxes and cess added by each player ( like the manufacturer, wholesaler, retailer) at various stages and by the time the end customer that is the manufacturer buys the product he ends up buying it the raw materials at a very high cost. But with the GST coming into picture (provided the tax percentage is lesser than the overall current tax%) then the realtor will end up shelling lesser price than he or she used to do earlier.
Also more jobs are being created in various sectors and consumers are being encouraged to spend their money more by the government. With the advent of schemes of Make in India and Skilled India the job market is showing great signs of improvement and the scope of employment is increasing steadily. The market is showing positive signs of increasing purchasing power for the consumers at various levels (an important factor for purchasing big ticket items like house, cars etc). So over all the signs are looking good for the people who want to invest in real estate market. As there is a popular saying “There is no time better than now”. Same way there is no time better than now to invest in Real Estate market and reap the benefits of it in near future.