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Nathalia Jones

The scramble for space and the objective to own a house, has always kept the resale home market going. "Brand new" is always best, but not always affordable. C. Sabesan of ISS Foundation in Chennai says the housing resale market has more or less stabilised over the decade. He attributes this to two factors: proximity and pricing.

"The prime preference for a home is a location near schools, colleges, hospitals, and other utilities." Within city limits, 8 to 10 year old houses can get buyers, he says. The recent relaxing of sanctions on loans for houses over 10 years old has certainly boosted the resale housing sector.

In determining the prices of old or used homes, factors like location, proximity to utilities and services come into play. The price of a used house in Chennai cannot go beyond Rs 1,300 per sq ft irrespective of where it is located. A house that is perhaps five years old will fetch about Rs1,400 per sq ft, says R.K.S. Moorthy, a Chennai based legal consultant who specialises in property loss.

He says the popular areas that are entering into resale housing include Raja Annamalaipuram, Mylapore and Mandavelli. For any of these areas it is possible to envisage a price range of Rs 1,300 at a minimum for the area's prime location. But in a prime location like Adyar, a second hand flat can go for as high as Rs 1,700 per sq ft, says Sridaran of Sriram Estate. "A lot depends on the builder and the structure," he says. Moorthy, who has sold a 27-year-old flat in Egmore feels that as long as "any flat complies with the conditions of good maintenance, it is re-saleable."

Next comes the question of added expenditure of refurbishing a used house/flat. This is estimated by builders to be between Rs 1 lakh for wood work alone for a three-bedroom apartment and Rs 60,000 for a two-bedroom flat. If the flooring has to be redone, as in most cases because of the preference for ceramic tiles or marble, that would cost between Rs 30 to Rs 90 per sq ft.

So is the market for reselling houses looking up?

Not really, says Moorthy. "Earlier, about threes years ago, the second hand market for houses and flats was considerably good, because there were relatively few builders. Now, builders are a dime a dozen, so the first preference is for a new flat," he says.

But, preference for a new house/flat doesn't seem to be the only aspect affecting the sale of a house that is over a decade or so old. Builders point out that the heavy stamp duty is a deterrent in going for old flats.

Says Venkatesh of `Vengi', property consultants, "When you buy a used house or apartment, the Stamp Duty is calculated on the guideline value set by the government. So if a flat is estimated at Rs 30 lakh and the guideline value is much higher, then the buyer pays a slab of 14 per cent on the guideline value."

This might work out to a staggering figure in the end.

But, at any rate, the resale housing sector is "a consumer dominated market," as Venkatesh observes. With the priority given to an ultra-modern home, one without a lift or a covered car park is unthinkable. "In this consumer dominated scenario, it is therefore, difficult to get the market value of a flat that is to be resold," says Venkatesh.

So what would be the best advice to individuals wishing to sell their old homes?

"Settle for the best deal," he says.

Speaking of best deals, Atmaram has slated his 884-square foot flat in Anna Nagar West at Rs 11.5 lakh and is hoping to clinch the deal sometime soon. The flat he claims is 18 years' old and in top condition. Still, though, buyers are hesitant because of the relatively outdated design — the flat has polished mosaic flooring.

But while others might be reluctant to purchase a house that spells retro in every brick, Vikram (name changed on request) has gone right ahead and bought a flat that is 10 years old in Kalekshetra. For him, refurbishing wasn't a problem since the "flat was in excellent condition and as good as new."

Looking ahead then, builders and buyers expect a lot of change in the resale market, especially with the upcoming hike in land prices and the stepping into the fray of nationalised banks that are freely sanctioning home loans. "With the increased availability of purchase loans and a relatively well maintained flat, the secondary market can survive," says Moorthy. However, he and C. Sabesan are not very optimistic about the reslae housing sector being able to sustain itself given the present "economic lull".

Photo by Bijoy Ghosh

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