By Akash Pharande, Managing Director – Pharande Spaces

Choosing between buying a new home and a resale property is an important decision for any homebuyer. They have to weigh factors like cost, convenience, and long-term value. New homes have the most up-to-date building codes, modern conveniences, and safety features. Resale homes are ready to move into and are often in established neighbourhoods.

Knowing the pros and cons of each can help you make a smart investment that fits your lifestyle and financial goals. As with any important decision and for a balanced approach, it is advisable to understand the cons as well as the pros of either option.

Primary Market Properties (New Homes From Developer)

Pros of buying from primary market

Purchasing a home from the first-hand market opens up potential for personalized financing options, and one is also assured of the latest amenities and better construction quality. Newly built housing has the benefit of RERA safeguards, which guarantee transparency to consumers. Moreover, buyers can overcome the inevitable maintenance pitfalls of older properties when they buy a new product. Finally, properties bought on the primary market tend to have stronger resale value.

Buyers can satisfy themselves with regards to the actual condition of the property, and the neighbourhood is already well established and generally tends to have more complete infrastructure than around new projects. Also, there is no GST payable on resale properties. The property will also be closer its ‘expiry date’ and therefore to eventual redevelopment, which can have very good implications for current owners.

Cons of buying from primary market

Buying a home on the primary market generally involves a higher cost, not least of all because of GST fees applicable on under-construction properties. There is always a danger of the project getting delayed when one is dealing with lesser-known players, which can lead to a doubled financial burden of EMI and rent while you wait.

If a project is delayed, buyers are left with uncertainty about the quality of construction as the developer may cut corners to expedite completion so as to stay RERA compliant. If there is higher volatility in the market, it can impact potential resale value.

Secondary Market Properties (Resale Homes from Owners/Investors)

Pros of buying from secondary market

Buying a home on the secondary market can often involve lower prices than available on the primary sales market, especially if the sellers is in a hurry to close the deal. However, this is not a given – if the resale property is in a high-demand/low-supply area, it may still command a premium.

One distinct advantage is that the property is ready to move in, and more or less ‘plug-and-play’. Also, it is a WYSIWYG – what you see is what you get – deal. Yet another potential benefit is that of securing a property in a saturated location where no new supply is coming in.

Cons of buying from secondary market

You may need to ante up more up front capital if the seller is looking for a cash-component-heavy deal – which can often be the case. You may not be able to detect less obvious or well-concealed defects in the property. Depending on the age of the property, home loans may be harder to come by and the wait for approval may be longer than for a new home.

Perhaps even more importantly, you’re settling for older construction and worn-out fittings, less updated amenities and designs, and may wind up paying higher maintenance.

There may also be title flaws, especially if the property has changed hands several times. And finally, the older a property gets, the less resale value it tends to have – expect, as already stated, if it is in a saturated but highly popular location where no new supply is coming in.

How to Decide

Much depends on your budget, your timing, and the appetite for or ability to weather risk. If you want the latest amenities, RERA cover and flexible payment plans, the primary market is for you. If you value move-in ready homes, less expensive up-front investment, and existing infrastructure, the secondary market may be a better bet.

You must factor in the implications of GST or the absence thereof, the availability of home loans and the terms on offer for each option, the future resale value of the home, and the legal soundness of the title. Also, evaluate your options in a given neighbourhood which is particularly attractive for you due to its proximity to your workplace and your children’s school, and sentimental associations due to the presence of friends or family.

– Advice to Investors – Primary Market Purchase

Make sure that the project has a RERA registration, that the developer has a sound reputation, and study the available payment plans- not least of all for less-than-transparent add-on burdens on your budget. Factor in the possibility of the project getting delayed, as this can significantly impact your finances.

As general rule of thumb, the better the builder’s reputation is, the likelier is reasonably timely possession. Do not neglect to account for GST and maintenance costs. Choose a location which has adequate infrastructure even if the project is new, as your quality of life there and also the eventual resale value depend on this. Study the market extensively before making a decision.

– Advice to Investors – Secondary Market Purchase

Pay strong attention to the property title and make sure that the property has all the necessary legal documentation. You can pay for a professional home inspection to verify whether there are hidden defects. Check your comfort level with cash components, which very often play a role in such deals.

Figure out how much you will be paying for maintenance, considering the age of the property – it is a good idea to ask neighbours about this as well as possible problems in the project and the location. Take pains to inform yourself about the going price trends in that area and project so that you don’t wind up paying a higher-than-necessary price.

To Conclude

Generally, purchasing a home from the first-hand market opens up potential for personalized financing options, and one is also assured of the latest amenities and better construction quality. Newly built housing has the benefit of RERA safeguards, which guarantee transparency to consumers.

Moreover, buyers can overcome the inevitable maintenance pitfalls of older properties when they buy a new product. Finally, properties bought on the primary market tend to have stronger resale value.

About the Author:

Akash Pharande is Managing Director – Pharande Spaces, a leading real estate construction and development firm famous for its township projects in Greater Pune and beyond. Pharande Promoters & Builders, the flagship company of Pharande Spaces and an ISO 9001-2000 certified company, is a pioneer of townships in the region. With the recent inclusion of Puneville Commercial into one of its most iconic townships, Pharande Spaces taken a major step towards addressing Pune’s current and future requirements for fully integrated residential-commercial convenience.