The apartments offered by banks are not always cheaper

Although the initial price of housing may seem an opportunity to assume a low price, the final cost, including the necessary reforms, it can be high The apartments offered by banks are not always cheaper versus those offered by agencies and individuals. In addition, a lower price is a result of the state of housing and the need for a "profound reform". This is the conclusion drawn from a study by the Organization of Consumers and Users (OCU).

Despite popular belief, the bank is the owner of an apartment is no guarantee that it is a good opportunity. Thus, after an analysis of 54 real estate properties, the study shows that half of the banks visited flooring needed updating, which in some cases had to be completed.

Thus, although the initial price of housing may seem an opportunity to assume a low price, the final cost, including the necessary reforms can be high. Also, keep in mind that at that price must be added the cost of sales, according to the autonomous region, may amount to 14% of value.

In addition, funding is obtained not always an advantage, according to the organization. The usual spreads offered by banks are between 1.6% and 3%, depending on the degree of relationship with the company by recruiting other products. In this context, the study shows that the cheapest differential stood at 0.9% for a flat with a high price.

In this line, the analysis shows that most banks finance 80% of the value of the home, while in 3 cases 100% financing offered, albeit with a less favorable terms for the interest rate and the added expenses.

So, OCU recommends considering that, in comparing prices between agencies, banks and individuals, the latter do not charge commission to the buyer, while some agencies do. In addition the organization advised to invest in housing that exceed four times the net family income.

In this context, he said that the brick has risks, high acquisition costs, taxes and management, and low liquidity. Thus, it states that "there is a comparable investment with fixed term deposits." Thus, the organization indicates that for a housing investment is profitable, the profitability of this should exceed 5% to offset the costs of purchase, the rent, the risk of default and damage.

HDFC may reduce home loan rates soon

India’s biggest mortgage lender HDFC says home loan seekers can expect a 0.5-0.75% reduction in interest rates ahead of the festival season if the Reserve Bank of India reduces rates later this month.

“If market rates come down, it normally takes us two-to-three months to pass it on because our liabilities get re-priced,” HDFC’s managing director Renu Sud Karnad said. She said she was hoping that the central bank would reduce rates at its annual monetary policy review on April 17.

The RBI has raised interest rates 13 times since March 2010, by a cumulative 375 basis points in its efforts to tame inflation.

Costlier loans have forced potential home buyers to postpone their purchase decisions and have, in turn, impacted the real estate market. Homes sales in Mumbai have dipped by over 40% in the last one year while other cities have seen a 20% drop.

Karnad, however, said high interest rates have not had much impact on home sales falling in the Rs 20-50 lakh bracket, whether in big cities or Tier II cities, because the need and demand for homes in this price range continues to remain high. She said HDFC’s home loan portfolio has increased in the last one year, but did not share the numbers.

“There is no concern or worry among young, middle-income Indians wanting to buy a house except in Mumbai, which is expensive,” Karnad said.

While most cities across the country have seen steady home sales in the last few months, Mumbai has been a concern for developers as well as lenders. Karnad, however, said even in Mumbai sales are happening in the suburbs, where price points are still affordable.

Home loan growth in smaller cities too has been phenomenal. Cities like Baroda, Lucknow, Chandigarh and Salem have seen 30-40% 0growth in home loans. “These markets might be small and this growth might be on a smaller base, but the fact is that there is demand. What they need is better supply of homes,” Karnad said. She said that the market expects a 10-15% cut in home prices, which seems to be high. Karnad also pointed out that builders are faced with rising cost of construction. Prices of cement, steel and labour have grown in the last two months, she added.

Housing Market Latest Reports

The year 2010 saw a real estate boom but the beginning of 2011 shows that the market again towards a downtrend. Update on the situation.

The balance of the year 2010 was marked by a strong rebound in property prices. A rebound confirmed by data from notaries in France. Thus on average, house prices have risen more than 8% in France.

These data continue to be analyzed and gives new information especially on the situation in the third quarter of 2010.

Location of apartment prices

For this period and year over year, home prices marked a rise of 8.5% yoy in the third quarter. But be careful, the situation is heterogeneous between a province sees increase its rates by 5.2% and peers more than 12.2%.

Location of house prices

As so often, the house price reacts differently collective dwellings. This is the case once more. Houses rose by 8.7% on average nationally, but with a nice 9.1% in the provinces against only 7.6% in Ile de France.

These data are interesting and clearly shows the interest of looking at the data in detail. In the case of a national average slightly lower parts of the country have been in sharp decline and others increasing.

The year 2011 marks the beginning of change

While statistically the price of housing in France is generally increasing (mainly due to the Paris region), some regions have already begun a process of decline. This is the case of Upper Normandy who comes in the last three months show a decline of more than 2%.

In addition, the real estate trend could change more broadly at the national level, leaving only the Paris region to rise. The first factors are expected to decline already at the rendezvous. For example, the return of higher mortgages. Loan brokers are finding that credit rates have already risen by more than 0.45% over the last two months. Some even predict an increase in appropriations of 0.5% in the next six months. The situation tends to the housing market nationally.

Factors of decline in the property market

Add to that a very unfavorable economic conditions with unemployment on the one hand that reaches just to stabilize at 9.7% in the third quarter of 2010. And above all, inflation is rising to iron some of which believes it will reach 1.5% in 2011. An optimistic forecast given the surge in raw materials such as grain or oil.

This inflation will also serve to strengthen the higher credit rates . Indeed, the governor of the European Central Bank (ECB), Jean-Claude Trichet, monitors inflation and could quickly increase the rate of the ECB to limit it. Must remember, this rate determines the cost of borrowing money from banks to the same central bank. The commercial banks will pass on the increase so future borrowers.

Finally, another negative factor is the reduction of the tax exemption Scellier which should slow down a bit more buyers.

Finally, 2011 should advertise the market hard and the balance of the year will be in the best conditions, probably a slight decline in prices and volumes. In a more pessimistic, some already announcing an upcoming real estate crash .