India has seen a boom in the property prices in the last two decades. This is basically due to the large increase in the demand for properties in all the classes. Every open plot will have some or the other construction happening be it commercial or residential. This has given rise to the home loans being taken from banks and other financial institutions. However not all the people who wish to buy a house or any other property can do so. This is for the simple fact that the rates of the properties have been reaching the sky. It is impossible for all to shell out such a huge amount and make a property for themselves.
Property prices going down, is what most middle class home buyers wait for. But that’s only one aspect of it. There is more to it.
With the ban of currency notes in India in the end of the year 2016, there have been a lot of buzz about the decline in property prices. This move by the government was a bold step to wipe out the unaccounted cash prevalent in the market. Such a step has brought down the property prices but the sales have not been able to increase. The reason is that money is not flowing in as expected. Moreover, there is a lot of pressure on the builders and developers to sell their inventory to start the rolling of cash. But selling at a loss is not acceptable to anyone.
The impact on the financial market with the demonetization has given a lot of positivity to the real estate market from consumers stand point. Since the inflation rates will decline in the times to come, the bank interest rates will reduce making the home loans cheaper. This means that the consumer can now avail loans at a lower interest rate and book a property for self-use. However, this is not the only game changer because the primary market will not see major changes. But the secondary market will be under immense pressure and can give away further discounts due to the stress related to lack of finance. The sales figures of the Primary market may dip as the focus will be on the secondary market with the distress sale. More incentives will flow out and heavy discounts will be passed on to the end users.
With the enforcement of the RERA Act, the business will be much stricter for the developers and it can be a cause of concern for the consumers as well. The consumers will wait for the right time to invest and this can be a cause of concern as the rates may not further go down. The developers have already started working on plans that will cap the budget for the consumers and affect them in the least possible way. The cash transactions will be reduced with such move and this will impact the cash-rich investors who invest for a better profit. This will again reduce the sale of property in many sectors.
Since the government is about to start the Goods and Service Tax in the current year, this may impact the Real Estate Sector. It can be a huge game changer and the sales may drop even further. The A-listers in the real estate sector have completely stopped their cash transactions making it difficult for the consumers to find the rolling options. For people who invest only through cash have become stagnant and cannot invest to move the market. The Benami Transactions Act has also affected the business as most of the transactions which used to happen in the real estate sector have stopped and this has led to reduction of construction at many places. The inflow of supply has been impacted by this move.
However, the government is making these acts and rules for the betterment of the end consumer. It will bring a revolution in all the industries and sectors and make the transactions transparent. This will further reduce the black money and give a helping hand to the government to build a better future for all. All such moves make the country stronger and move on the path of development. So let us support the government with all its reforms and changes to make India a better nation in the world ranking.