Have instalment plans revolutionised purchasing activity in real estate?

Development, Investment Tips Comments (0)

There was a time when investors and genuine buyers had a hard time saving every penny to accumulate enough money to buy a piece of land or a house. More often than not, it would take them a substantial time to realise their dream and many would simply give up, as other expenditures arose, forcing them to forego their plan of purchasing a property of their own.

Now the property purchasing process has become way simpler. Although real estate prices have escalated a lot, people still seem to be able to afford one, two, or even more plots and houses. All of this can be attributed to the convenient instalment plans offered by real estate developers.

Unlike old times, investors now have to make a down payment with an option to pay the remaining amount in easy instalments spread over years. There is a catch here: investors who follow instalment plans are bound to pay more than those who prefer to settle the accounts by making lump sum payments. But, as this amount is dispersed over a period of time, investors do not feel as burdened as they probably would if they had to pay the amount in full. And this way investors are able to consider multiple real estate options simultaneously.

Convenient payment plans have definitely increased market activity as well as property values. As the rules of demand and supply suggest, price of a commodity increases when there is a massive demand, given that the supply remains constant. This may be good for investors who purchase real estate at the launching stage and then benefit from ‘on’ (added profit before all instalments have been paid). However, this is bad for investors who purchase property at a later stage and have to pay a higher amount.

It is advised that investors do their proper homework and invest in promising projects immediately after launch or at least when there are clear signs that prices will rise in the near future.

I would still advise those having cash in hand to make lump sum payments instead of following long instalment plans. Why pay more when you have an option to pay less?

That said, it is true that the introduction of payment plans has revolutionised property sale-purchase activity and has also increased property values. And whether or not it is a promising addition is something debatable.

Reference:www.zameen.com

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On December 4, 2017
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