It’s 2023 – a new year, with new opportunities, hopes, and aspirations. If you’re on the market for a home this year, you will doubtlessly have wondered whether a resale flat will fulfill your needs just as well as a new one. It’s a natural conundrum – resale homes are generally (though not always) cheaper than a newly constructed or under-construction one. The exception is when the resale home is in a project or location which has a lot of demand and next to no supply.
What is the right option? First, let’s examine all the reasons why homebuyers may consider a resale home the better option:
Pros of Resale Homes
- They’re cheaper – except in the instances already mentioned above.
- The property is fully constructed and ready to move in, so what you see is what you get
- The neighbourhood will be an established one, so it’s easier to determine how well you and your family fit into it, or it may be highly aspirational. Some locations are ‘vanity pin codes’ where owning any home – even an old one – seems very desirable.
- If the property is very old, it may eventually come up for redevelopment, in which case its value can eventually increase
- Common problems that beset apartments, such as leakage and seepage, are apparent (except if the current owner has managed to cover such flaws up convincingly while the property is on the market).
Cons of Resale Homes
- Older properties will have experienced wear and tear, which depreciates the value (this is why they’re cheaper)
- There are invariably costly renovations and repairs necessary – and older homes also cost more to maintain
- Older buildings do not have any of the modern amenities and facilities which most homebuyers take for granted these days
- There may not be reserved parking. Premises developed even 15 years earlier were built for a world where personal vehicles were relatively fewer
- If the property is several decades old, banks may not agree to grant a home loan on it
Obviously, there are also pros and cons to buying a home in a new project, which did not have any previous owners and may be ready to move in or still under construction.
Pros of Newly-Constructed Homes
- The appeal of buying something brand new – be it a car, electronic gadget, jewelry or a home – cannot be emulated by buying a resale home
- The project will tend to have the latest amenities and facilities
- It will have adequate parking, or it wouldn’t be marketable in this day and age, and also electric charging points for EVs
- The project is very much more environmentally sustainable and cost-efficient – it will have solar heating, rainwater harnessing, and modern waste disposal
- It will command a higher resale value if the owner wants to sell it sometime in the future.
Cons of Newly-Constructed Homes
- If the project is under construction, the homebuyer will have to wait until it is completed before he/she can move in and enjoy the new home
- If the project is being built by a smaller/under-funded developer, there is always a risk that it may get delayed or even not be completed at all
- Problems like leakage and seepage will not be evident when the property is still new
- While the price of an under-construction flat will be competitive and often in line with that of a good resale flat, ready-to-move homes in new constructions cost more than resales
- If the project is built on a smaller plot, that unobstructed window view you have at the time of purchase may change drastically in the future as the area develops further
The above points are by no means exhaustive, but serve to give a fair idea of what’s at stake. Now, for the main question – should you buy a new home or a resale?
The Bottom Line
No doubt, the price difference between new and resale homes plays a significant role. It can be as little as 3-5% or as high as 25-30% – much depends on the builder’s brand, quality of construction, and location characteristics.
In the case of resale properties in highly aspirational neighbourhoods, there may be no difference at all. The price difference will also depend on the stage of construction of the project – it will narrow as the project nears completion.
But as we have seen over the past 2-3 years, price is no longer the main criterion for a large majority of homebuyers today. There are several other reasons than the ones mentioned above why most Indian homebuyers will always prefer a new home over an old one.
In many cases, there are not only sentimental but also religious factors involved – for instance, the Dussehra-Diwali festive period is all about acquiring brand-new assets. But that is only part of a larger story.
Homebuyers today are extremely savvy. Construction risks are easily negated by picking the right developer and project. By choosing a new home in a properly planned township, they ensure that the window view will not change. Reputed developers stand by their products and offer high-grade after-sales service, which takes care of any flaws that may emerge after purchase.
Moreover, buyers of new homes can avail of various discounts and offers which are not available in resales. In under-construction projects, prices are lower than for ready-to-move-in options. Also, if the location is still growing (which is often not the case while buying resales), prices will appreciate in tandem with new social and civic infrastructure.
This is the critical factor. As an investment, under-construction homes are nearly always the superior option as prices are low now, but will increase as the location matures. At the end of the day, homes are bought as investments for future financial stability and potentially even gain.
New homes deliver the assurance of good returns on investment, offer a superior lifestyle, and higher safety and security. This is why most of the demand today is for newly-constructed or under-construction projects by good developers who deliver what they promise.
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By: Akash Pharande, Managing Director – Pharande Spaces