The price gap between ready-to-move-in and under construction homes has declined to just 3-5 per cent in the first quarter of 2021, according to a report by Anarock Property Consultants.
It noted that the price gap between ready and ‘off plan’ or under-construction housing has been narrowing on year-on-year basis since 2017 across the top seven cities.
In 2017, the difference between the two categories was anywhere between 9 per cent to 12 per cent across cities, while in 2018 it was 5-8 per cent.
The National Capital Region (NCR) and Mumbai Metropolitan Region (MMR) recorded the least price difference between ready-to-move-in and under construction homes at 3 per cent.
The average prices of RTM homes in NCR were Rs 4,650 per square feet while for under construction homes it was Rs 4,500 per square feet and in MMR it stood at Rs 10,700 per sqaure feet and Rs 10,350 per square feet respectively.
Pune, Hyderabad and Chennai have the highest RTM/UC price difference at around 5 per cent. In Bengaluru and Kolkata, the difference is just 4 per cent.
“Previously, buyers of under-construction homes had one major advantage,” said Anuj Puri, Chairman of Anarock Property Consultants, adding that “their patience and willingness to court construction risk were rewarded by notably lower prices.”
However, construction delays and stalled projects had a predictable outcome and risk-aversion set in, with demand tilted heavily towards ready properties. While the fact that RTM homes do not attract GST has been an added attraction, even the price gap between RTM and UC homes has eroded substantially, from 9-12 per cent in 2017 to just 3-5 per cent by Q1 2021, Puri said.
The shrunk price gap works well for end-users as well as investors. End-users can see what they buy and save rent by moving in immediately, while investors focused on steady rentals can start earning right away, said the report.
In the past four years, developers have been reluctant to increase the prices of ready homes as they need to clear their inventory. “Not surprisingly, ready homes are the ‘in’ thing,” it said.