The real estate market has virtually plummeted following demonetisation and other steps taken by the Centre and prospective buyers are in a “wait and watch” mode. They are taking their time as clarity is yet to emerge, but are hoping that these moves will bring about transparency and reduce prices in the new year.
“Transactions in the real estate sector have virtually dried up, particularly in the land and capital raising business. Enquiries on residential sales have witnessed a drop and prices in the secondary market are softening,” said Anuj Puri, chairman and country head of real estate firm JLL.
Property experts say that 2016 was a landmark year as, apart from demonetisation, many other measures were taken by the Centre to bring about transparency. The Real Estate (Regulation & Development) Bill (RERA) was passed by Parliament in March 2016. Rules and procedures have been framed, and the Union Territories as well as two states — UP and Gujarat — have already implemented it. All states have to meet the deadline of implementation i.e. one year from the time the bill was passed. Also, the GST was cleared in 2016 which will also have a good impact on the real estate sector.
The Benami Transactions Act, which came into effect from November, will help curb black money flow into real estate and also render holding of property under fictitious names a punishable offence. Prime Minister Narendra Modi’s stern warning to those holding illegal Benami properties has resulted in hope that there would many inventories available in the new year, leading to drastic fall in prices. Therefore, prospective buyers have stopped their plan for the time being, waiting for more clarity.
Vidip Jatia, Director, Belmac, the real estate arm of Supreme Holdings & Hospitality Limited, said: “Due to demonetization, there is a little sprain in the market which in return will have a positive impact in the long run, as it brings transparency in the system. Carrying out of RERA will help boost and secure the interest of buyers to invest in the real estate sector. Based on our past experiences and understanding, we are anticipating that sentiments of the market will improve in 2017. Fence-sitters will be able to take a positive call which will in return boost up the sales.”
“Since old currency notes are no longer valid, home buyers/ investors using unaccounted wealth to carry out transactions in cash are facing a tough time, and developers accepting cash components are facing a higher liquidity crunch than those accepting all payments through cheque/ bank transfer. Overall, it will be interesting to see if 2016 sets a new benchmark in units launched versus units sold,” said Puri.
According to Vikrant Thakur, a Noida-based property consultant, home prices are likely to decrease in the new year. “We have to see the impact of the Benami Act. But in any case, there would be clarity on tax credit for real estate transactions, leading to fall in home prices. What is going to be the GST rate for the real estate sector will become clear next year.”