The myth of the affordable home
Indian homebuyers today need to be realistic to accept that the ‘ideal home’ is more or less unattainable and must not get carried away to buy a house that is not in sync with their financial realities or other practical requirements
You read of it in advertisements and on hoardings, and hear of it in radio jingles and TV commercials - the ideal home, or ‘dream home’. It makes you wonder if you’re living the lifestyle you truly deserve, if your previous home purchase decision was too hasty and if there is a chance you could do better. The ‘ideal home’ is a ubiquitous marketing concept, and it haunts buyers before and after a property purchase. But is there really such a thing in India?
THE ‘IDEAL HOME’ PARADOX
By and large, the concept of an ‘ideal’ home is very relative in this country.
While everyone carries a picture of their dream home in their hearts, that image usually cannot translate into reality in this country.
People long to stay close to nature, yet also close to the excitement and opportunities of the city. They long for a home in an environment unpolluted by noise and vehicle emissions, yet depend heavily on public transport and roads to use their personal vehicles for commuting to and from work.
Even the richest of the rich have to opt to have their primary homes in the city so that they can remain wired into their various business interests - although quite a few can and do opt to live at elite addresses with better infrastructure, more greenery and no overcrowding.
That is not an option for the biggest chunk of middle-class Indian homebuyers, for whom home purchase always involves compromise on their vision of an ideal home for themselves and their families. Not only are they constrained in terms of how much they can afford to spend, but our cities themselves have several inbuilt constraints. In fact, the bigger they are, the more the constraints tend to be.
Indian homebuyers today need to be realistic enough to accept that the ‘ideal home’ is more or less unattainable, and are content with settling for the best they can get.
YEARNING FOR THE ‘IDEAL HOME’
In their search for the ‘ideal home’, Indian homebuyers can get carried away on quite a few fronts. They may over-leverage their budget to buy a larger flat than their financial situation justifies, in locations which - while definitely having a certain social ‘feel-good’ factor - may not necessarily deliver an improved lifestyle. They may give in to their aspiration to live in a less cluttered and less polluted area, and as a result become stuck in a location bereft of basic facilities such as regular water and electricity supply, or access to important social infrastructures like shopping, schools and hospitals. Such homes will not see any real capital appreciation, eliminating the potential for putting them back on the market to move to another area. On the flip-side, they may lay excessive importance on the ability to commute to and from work conveniently and wind up buying a home in polluted, stressinducing area that compromises their physical and mental health. The ‘ideal home’ would provide all the conveniences without the compromises, be affordable and have great resale value. With that being an elusive dream, homebuyers may focus on one or two items on their wish list and not pay enough attention to other important factors.
RERA - A RAY OF HOPE?
Lured by promises of their dream home at attractively low rates, countless Indian homebuyers fell prey to marketing hype in previous years - and paid a heavy price.
Now that RERA is in place, the risk of buying into a project that gets unduly delayed or does not take off at all has been greatly reduced, as has the potential for low-grade construction.
Also, the current market presents buyers with the option of buying a de-risked ready-tomove property at a reasonable price which can be further negotiated.
However, the resale market still risky for ‘ideal home’ seekers. True, the resale market can offer properties in aspirational locations which saturated long ago and cannot support new supply.
However, the resale market is not protected by RERA. Also, one may buy a flat in an old project which requires very high maintenance, or which turns out to be illegally constructed and may be demolished.
Also, over-leveraging one’s budget via a home loan in the quest for the ‘ideal home’ without a very clear picture of whether one’s financial status will support it over the tenure of the loan can result in a major loss.
ADVICE TO HOMEBUYERS
Homebuyers need to focus on properties which fall within their current and future budget. The home they buy now should fulfil their requirements for at least 4-5 years. For the next 2-3 years at least, it will be pointless for an end-user to enter the market with an investor’s mindset and hope to be able to upgrade quickly if the flat turns out to be a bad choice. For the same reason, it makes no sense to buy in a cheaper project or locality which lacks the basic ingredients of a satisfactory lifestyle.
Given the current market environment, one needs to find a good middle-ground and make the best home purchase decision possible under the given circumstances. It is highly advisable to use the services of a reputable property consultancy, which can eliminate the guesswork and de-risk the final decision by allowing the buyer to examine all facets of every option with the benefit of expert guidance. Most first-time homebuyers are not equipped to foresee the many potential pitfalls inherent in an unwise property purchase decision.
The concept of an ‘ideal home’ tugs at the heart-strings, but a home needs to be bought with the head, not the heart. The heart - or, to be more accurate, the emotions - can be a good reference point, but buying a home should not be an emotional decision and be steered by logic, due diligence and balanced expectations. The head is the seat of rational decisions, and it must be from there that home purchase decisions are taken.