Buy that dream house

"Homes are now most affordable since '05" scream today's headlines in Times of India. "Wow!" you say and dive into read more. It turns out that the average housing prices have dropped from 4.6 times the average annual income to 4.5 times the average annual income. Big deal!

The fact remains that houses - good houses, those that you would love to stay in - will remain out of your reach. Always.

So if you are waiting to buy / build that dream house when you have enough money, it will remain just that - a dream house.

Here are some tips:

1) Start Young.

2) Set up a low-risk investment plan that will get you sufficient returns in say 3-4 years. Banks give up to 80% (in some cases 90%, or so I have been told). The rest has to come from you. So, if you are looking to buy or build a RS 800,000 house, at least Rs. 160,000 has to come from you. a well planned SIP will fetch you that amount in 5 years or earlier.


3) Always look for a house that you would like to live in 5-10 years from now. In 5-10 years your income will grow and you will not feel the pinch so much.

4) Another way to obtain the money you need to build a house. Buy two plots of land. Sell one. Use that money to build on another. I haven't done this myself. But I have heard of others who have done so.

5) Some people I know have done this. Four of them pooled money to buy a biggish plot of land and later on constructed a house with four independent flat.

6) Look out for bargains during economic downturns. I purchased my house just after the software bubble burst.

7) Unless you can afford it, do not buy house in a central location. It will cost you more. Cities have a habit of expanding. That house in the outskirts of the city will one day become a hub.

8) Also read Before You Take a Home Loan and After You Take a Home Loan