Demonetisation: Actual home buyers benefit; developers roll out attractive rates and payment plans

   New Delhi     Last Updated: May 11, 2018  | 18:56 IST
Demonetisation: Actual home buyers benefit; developers roll out attractive rates and payment plans

The real estate sector, known as a safe haven for parking black money, was hit hard by demonetisation. The sector which was already going through as tough phase saw sales go down by 32 per cent during the October-December 2016 quarter compared to previous quarter as per Anarock Property Consultants. Apart from this there was a drop of around 60 per cent in new launch supply in the quarter.

Demonetisation along with other reforms-- Real Estate Regulatory Act(RERA) and Goods and Services Tax (GST)-- disrupted the real estate market at least in the short-term.

However, these reforms have turned out to be a blessing in disguise for the actual home buyers as the prices have remained almost stagnant or dipped a bit across major cities. "While a few cities such as MMR, NCR and Chennai have witnessed minor corrections in price, other cities - namely Bangalore, Pune, Hyderabad and Kolkata  - have shown a small upward movement," says Anuj Puri, Chairman, Anarock Property Consultants. Now the developers are more focused towards clearing their existing inventory rather than launching new projects. This is ensuring that the home buyers who were waiting for the possession of their house are actually getting it and more ready-to-move-in projects will be available in the market. "The subdued demand and huge unsold inventory have led developers to maintain competitive prices to offload their existing inventory faster and complete their ongoing projects sooner," he added.

"Owing to the ongoing transformation, developers have also been offering attractive rates and payment plans to draw potential buyers. It is a great opportunity to book homes and cash in on the deals offered by developers," says  Surendra Hiranandani, CMD, House of Hiranandani. Apart from this, the influx of liquidity with the banks due to demonetisation has also led to a drop in interest rates which has brought down home loans interest rates at almost a decade low. Now majority of the banks are offering home loan in the range of 8.35 to 8.5 per cent. Lower interest rates means lower EMI and thus increases the budget of the home buyers.

Also, the cash component or black money component has gone down after demonetisation claims experts which will be  a big positive for actual home buyers as this will curtail the prices from going unreasonably high as we had seen during the previous boom.

"The funneling of unaccounted monies into the real estate sector has become virtually impossible because of the demonetisation move, which means that future growth in the sector will be based on much sounder and more sustainable fundamentals than ever before," says Anuj Puri, Chairman, Anarock Property Consultants. Also, the reduction of cash component will help homebuyers buy their dream house which was earlier difficult -- they couldn't buy due to the cash component despite the fact that they were capable of getting home loan and  paying EMIs.  

"In fact all property purchases today already take place on the basis of transparent cheque payments and legal online payment gateways in the post-RERA era. Real estate transactions happening on the basis of cash, or with any significant cash component, are inevitably going to be questioned by the authorities.  Nobody wants their property investment to fall under scrutiny for untoward practices,"added Puri.

"Demonetisation needs to be seen in the context of a wider program of reforms in India which are significant in terms of the nation's economy, society and real estate sector. While it did result in some short-term pain for the sector  there has been no long term negative impact. Demonetisation, coupled with the implementation of the Real Estate Regulator Act and GST reforms  has boosted the confidence of investor and added much needed liquidity in the market," said Anshuman Magazine, Chairman, India & South East Asia CBRE.  


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