Retrieving Wisdom of Owning Independent House

The idea of owning a house is very deep rooted in Indians. As much as it is a financial asset, it also is an emotional investment. From homes to apartments – there has been a paradigm shift in home buying patterns in India. Not long ago, having your independent house was considered synonymous with ‘own roof and shelter’ and there was an aversion to the idea of flats/apartments. But as relocation to metro cities became the norm and dual income families became commonplace, the apartment culture started taking over the residential market. 

The world of real estate investment is overwhelming, to say the least. Investing money in a property is not an easy task. Not only does one need to find a safe avenue, but also think about whether to purchase an independent house or a flat in a society. While today’s fleet-footed generation has an affinity to invest in apartments we are increasingly seeing young people’s interest in building their own independent houses. The preferences of home buyers are changing. As the acceptance for remote working goes up, many people are exploring house options outside the crowded city centres.

Perhaps the most obvious benefit of independent homeownership falls in the financial realm. Residential homes, even those that claim to be the most affordable ones, are typically priced much higher than a plot of land. Because of this, most of the potential home buyers need to pay a lump sum amount or take a loan and pay EMIs to finance their apartment costs. A self-constructed house, on the other hand, is much more cost-effective and provides financial flexibility. Land costs’ are flexible and are typically dependent on city centres. Buying land within the city limits might be costly while moving towards peripheries will be relatively low. In terms of layout and overhead costs, the apartment buyer has no freedom to change the shape and size of the construction area along with the fittings. However, constructing a house independently gives you the freedom to tweak parameters and fit them in your budget, usually costing less than that of an apartment.

Considering long-term financial gains, a house constructed over a plot can reap good returnsas compared to apartments. As developing a plot is easier than building a structure, the value of your investment is likely to rise faster in a short span. Location is the key to price rise. If the market is stable, the value of a plot will rise over time depending upon factors like the surrounding environment, quality of land, and other upcoming infrastructure facilities in the area. Also, age does not affect a land parcel but a structure becomes dilapidated with time. As opposed to apartments that continue to depreciate, the ROI on self-constructed houses has a catch, where the value of land parcel appreciates and the value of house depreciates over time.

Owning a land parcel also gives you the independence to begin construction depending on your finances. The low entry ticket size means that even young investors can purchase land without any financial obstacle. Many investors choose to purchase land early in life and build a home on it later when the finances are readily available.

Delay in the real estate sector continues to be a pain point for customers. Buying a plot has almost low to negligible delivery risk while the delivery risks in the case of flats are high as the developer has to fully construct the property and the number of approvals and clearance required are much higher. This also means constructing your own house has lesser chances of delay as compared to purchasing a flat. Along with this, owning a house provides several other benefits as well. The owner has complete privacy and safety systems that can be planned according to convenience. Homebuilders have the freedom to choose their designs according to their preference and budget and have the option of building a house whenever they are ready. 

The decision to purchase any property depends on parameters like cash flow, financial assistance, time frame, location, and future preferences. No fixed investment strategy will work for all. The best approach would be to make a decision based on the desired holding period, costs incurred and the autonomy you wish to have during the entire construction period. Independent houses provide you more freedom in every aspect as compared to apartments. Perhaps just like everything, we will go back to our roots once we realize our parents/ grandparents’ wisdom of owning a house never went out of fashion.

The author is Co-Founder and CEO, Brick&Bolt

DISCLAIMER: Views expressed are the author’s own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.