This is an emerging segment and a large number of buyers are in the market now.

Every market shift throws up challenges and creates opportunities. The present economic slowdown has posed several challenges for developers to come up with attractive offers to sell their apartments. On the other hand, it has given rise to extremely good opportunities for investors and homebuyers. Banks too have pitched in with loan offerings tagged with low interest rates. In other words, the era of affordable housing has arrived.

Changing market dynamics

In Bangalore, the real estate market rode the crest of a booming IT segment for almost a decade. Whitefield, Devanahalli, Yelahanka, Hebbal, Sarjapur Road, and Bannerghatta Road, that were once considered suburbs without good connectivity and basic amenities, were included as part of Greater Bangalore. Road development and other infrastructure projects such as the international airport, the Metro Rail, elevated road, and underpasses improved connectivity to these localities, sending realty prices upwards.

New segment of home buyers

From October 2008 onwards with the global economic downturn, the real estate sector began going through a correction and prices fell up to 30 percent. This brought in a fresh segment of homebuyers and investors into the market, waiting to make the most of what was on offer and within their EMI structure.

Those employed in government services, bank employees, teachers, double income couples who had pay cuts but steady employment, singles with good income, all became prospective homebuyers. Homebuyers who were not wooed by developers earlier are now ready to buy homes because they fall within their budget. Now that prices of property have come within their budget, they have the money ready for a purchase.

Win-win situation

Gauging the rising demand for smaller and affordable homes with premium facilities, established builders have announced projects on the outskirts of the city promising homes available for prices ranging between Rs 20 lakhs and Rs 40 lakhs. This works out well for both developers and homebuyers. For those buying their first home, they still get a good deal with banks offering home loans of 85 percent of the value.

A few real estate developers, who have large land banks in the peripheral areas, have earmarked projects in Bangalore North and South for affordable housing. This kind of affordable apartment options are being made available in the range of Rs 20 lakhs to Rs 40 lakhs depending on the floor area. Currently, three affordable housing projects, one in the north zone and two in the south - one near Mysore Road and the other on Sarjapur Road - are coming up on the city outskirts giving real estate development a boost.

Investment prospects

The fact that homes have become affordable now should come as a boon for those who had been planning to buy a home before the downturn. In the current market scenario buying a flat, both as an investment and a potential place to live in, should be the objective for a family having a collective take-home monthly income of Rs 60,000-75,000. They can look at investing in a flat in the range of Rs 25-33 lakhs where their combined EMI works up to around Rs 20,000-30,000.

People, especially first home buyers, are buying affordable homes now because you can get a decent 1,000 sqft, two-bedroom apartment easily for Rs 25 lakhs. Even two years down the line, this can fetch a 20 to 30 percent appreciation if they desire to sell it to buy a bigger apartment.

Some tips to help you manage your home loan repayment better and plan finances for other needs too

A home loan is a longterm commitment for a borrower. You need to make regular repayments month after month for some 15 to 20 years. When a major chunk of the salary goes towards the loan repayment, other important expenses get overlooked. Planning finances becomes a major challenge. Striking a proper balance between debt repayment, investing for the future and meeting home expenses is critical.

Financial planning aims at meeting your long-term financial objectives. It includes asset allocation, exploring investments, tax planning, retirement planning and risk management. Financial planning first involves computation of your earnings, estimating your future needs to maintain your desired lifestyle and arriving at an investment plan to reach your objectives.

If you thought that your home loan was the only longterm commitment, it is not so. Children's education, marriage expenses, retirement savings, medical bills, unforeseen expenses and emergencies are all major expenses. You may also have other debts like personal loans, credit card bills and vehicle loans. Spending too much of your income and improper management of money, can lead you to a debt trap.

The tenure of any typical home loan is usually long. And owing to inflation and other pressures, a floating rate of interest is bound to go up as years pass by. So, your EMI due to the lender may shoot up, but your salary may not move up by the same fraction. Hence, when planning for repayments keep a considerable cushion for these increases in rates. Uncertainties abound. The health of the economy, inflation numbers, interest rates, your job stability and financial conditions are indeterminate elements. Repayments can become an arduous challenge for many borrowers if no cushion is provided.

The interest rates are showing signs of taming down. If the trend continues you can expect further reductions in rates. Borrowers must make as much down payment as they can, so that the burden of their EMIs will be minimal. Then, opt for floating rates, rather than fixing at the current relatively high levels.

If you were contemplating a vehicle loan or another personal loan, simply postpone to a later date. More debt means more financial obligations. For those already reeling under the burden of rate hikes, acquiring new debts can be an unwise move.

The key to successful retirement planning is to start off quite early and benefit from the power of compounding. Retirement planning acquires even more prominence because the inflation monster is waiting to eat into the money in your savings account. Increased life expectancy and escalating medical costs increase the need for a decent retirement savings.

If you are in a serious unmanageable debt, work out plans to sail out of debt first. This may include paying off high interest loans, paying credit card bills on time and cutting down on a lavish lifestyle. Investments in debt instruments, equity vehicles, balanced funds, real estate, and insurance must be made with due diligence. Adopt a disciplined approach and refrain from the temptation to splurge till your debts are paid off.