How is the overall trend over the last 10 years?
In June 2011, the one-year returns stood at 23.1%. They peaked at 26.3% in December 2011 and have steadily dropped since then. In June 2020, the one-year return was 2.8%, the lowest ever according to the index. Indubitably, the disruption of activity following the pandemic-induced lockdown and slowdown in country’s growth are responsible for this.
What are the costs of owning real estate?
Owning real estate always comes with its share of costs. This starts with the buyer having to pay a stamp duty to state government while purchasing the real estate. There is also the maintenance charge that needs to be paid to the society. There is also the regular cost of maintaining a home and the annual property tax. Of course, homes can and often are rented out but the rental yield is not high and lies somewhere between 1.5% and 2%. It should be considered that loans taken for purchasing home also provide some tax relief.
What are real returns of owning real estate?
On top all the costs that have to be borne by the person investing in real estate, there is inflation. Once you take into account the costs of owning real estate, even with a few benefits, the overall return in most cases hasn’t been great over the last decade. This is without taking into account that many builders are either not delivering homes on time or are simply disappearing. Of course, all of this varies from person to person, from city to city, and also from locality to locality.