Friday, February 22, 2019
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Impact Of Demonetization On The Indian Real Estate Market

You will be agreeing with the fact that in India, investing in a residential real estate property is one of the popular ways to generate wealth. People usually look forward towards buying residential property at reasonable rates in order to earn the significant returns, whenever the values rise. It has been observed that depending on the soaring demands of affordable residential property, developers have come up with a good number of residential projects. However, with the ‘Demonetization’ rule things have taken a toll on the real estate sector.

Today, the Indian real estate sector has suddenly started facing issues with the announcement by  Mr. Narendra Modi, Prime Minister, India. The sudden announcement on 08 November 2016 has shaken the whole nation. By far, this is the best-kept secret ever by any government and the biggest surprise for the entire nation. The announcement on demonetization has started with its impact on the sector, thereby, leading to the delay in the property deals and transactions.

Impact Of Demonetization On The Indian Real Estate Market

Let us see, what the present real estate market situation in India is.

Curb on Black Money: None of us can deny the fact that the real estate market in India uses black money or illegal transaction in order to develop projects. Removal of the high-value banknotes has brought a significant impact on the real estate division. This has already started with the high inventory levels and slow sales growth. Initially, there will be a few problems investing in the affordable residential property.

Of course, such changes will bring an impact on the transactions and new bookings as well. Equally, the secondary market will face the adverse impact, because of the major involvement of the cash component. Only the main real estate market will stay unaffected as almost 90 percent transactions are usually performed through bank loans.

Low Property Dealings: Right after the announcement on demonetization on the existing notes (500 & 1000), the property inquiries have considerably dropped and as discussed before there are no new bookings taking place. For the time being, the land market is expected to go through a downward trend with the property deals freezing.

Price Correction: It has been witnessed that there has been a substantial decline right after the demonetization rule. As per the media reports, the prices of real estate properties have also fallen by 25% at least in areas like Gurgaon and Delhi. A fall of at least 40% rates is expected to happen in the near future. Further, the real estate market would face a push down on the property prices as well. No wonder, the slash in the rates will be a welcoming change for all homebuyers, although it will not be a fruitful result for the promoters.

Control on Corruption: It has been noticed that the real estate market usually faces problems while getting consent from the authorities. Hope, after this bold step there will be a reduction in corruption and bribery issues while getting the fresh approvals in the real estate sector. Of course, this will also help in tracking the entire process, thereby, limiting the delay in the completion of the real estate projects.

You need not worry at all, all you require is to stay calm and wait for some time to invest in the affordable residential property. With this smart step from Modi, good things are expected to happen in the real estate market very soon.