Chennai has always been considered as a good resalemarket for residential properties. Good value for money, ready-to-occupy status and locational advantage has always attracted buyers to second-hand flats. This trend has been on the rise in recent times. This trend has also brought to light the various issues that come with buying them.
A few weeks ago a resale apartment fair was held by HDFC Ltd. The response to this resale initiative was very good and more than a thousand properties were on resale and it is reported that the realtors associated with them are busy closing the deals.
In the present market conditions, many buyers do not want to wait for construction of the house. So HDFC brought together the realtors concerned and facilitated the resale by providing loan facilities.
Most of the buyers wanted property in the city limits in the price range of Rs 50 - 70 lakhs. But properties available for resale in the city limits are in the range of Rs 1.25 to Rs 2 crores. The market slowdown has made the task of finding clients for new and upcoming apartments more difficult for many banks. Tapping the potential for resale of property has become a necessity for the banks and buyers may be able to gain from the development. The merits of buying a house on resale include lesser price and location within city limits.
The demerits of buying such houses are possible deviation from the approved plan, internal problems among the members of the residents' association, including legal proceedings and absence of opportunity for the buyer to assess the quality of construction.
Technical valuation of a property on resale normally calculates depreciation at 1.5 per cent per year. Around 75 per cent of properties on resale are 'delinquency flats. The registration charges are higher for resale apartments as it is decided on the guide- lines value of the total property whereas in a new apartment, the charge is arrived at only based on the undivided share of land. However there were no delinquency flats among the property on resale during the recent initiative of HDFC. Brokers continue to say that the market is favouring the buyers.
As market prices of new flats are gradually reducing, price of resale flats should also follow suit soon. Buyers analyse the aspects such as location, quality of construction and track record of the builder in the process of resale. The buyers not showing interest in properties on resale in outlaying areas.
The majority of buyers showing interest in properties on resale are end-users and the investors are not opting for purchase of properties on resale. Many properties on resale belong to speculators who invested in the property a few years ago and planned to sell the property at a higher price soon after the construction got over. They wanted to sell the property as quickly as possible fearing a reduction in the prices. With rentals not increasing to match the EMI, speculators are finding it difficult to maintain the property.