As you might have heard that current high value denomination Rs500 & Rs1000 will not have any value from 09th November2016 as per Government of India and new high value denomination of Rs500 & Rs2000 is being released. By phasing out Rs500 and Rs1000 notes the government has taken the fight against domestic black money to the next level. Many people were saying that it is a watershed moment for the real estate.
Ten to twenty years back when black money was used to purchase land, so that unauthorized builders and developers could avoid paying tax. In the last 6-7 years government has brought many bills to fix the loophole in the system. The buyer in the primary market mostly takes mortgage from leading banks. To develop projects even authorized builders and developers have to take huge mortgage from government recognized banks so every transaction is legal.
There are rampant news articles about there being a correction in pricing of real estate by various opinion makers who seem to think they have the authority to make such claims. As an industry body representing organized real estate,we again reiterate that the industry has always been catering to the primary market which comprises of end users who aggressively avail home loans. Moreover, with this step of demonetization, banks are again going to be flushed with liquidity of approx.
15 lakh crores and will be compelled to lend aggressively .To do that ,they will have to lower interest rates. Demonetising currency has also removed surplus liquidity from the market and this in turn will result in low inflation.We expect that the RBI would definitely, in the coming months ,reduce the REPO rates by at least 2% so that a home loan would come down to at least come down to 7% .The home loan rates coming down to such levels of sub 7% in the next year or so, the atmosphere will become more like the west where home loans are available at 5%. and below.Unlike the western countries, India has a documented shortage of housing and homes,an aggressive domestic demand for real estate.This essentially means that in the presence of a lower home loan interest regime, a larger pool of home buyers would avail loans to buy the home they always wanted.This could be made possible in as soon as the next six to twelve months. The housing industry will start to grow at a rapid pace while concurrently being in compliance with transparency and fair practices like RERA (Real Estate (Regulation and Development)) .
Now any transaction above 50000 would automatically require PAN card details. It becomes quite difficult to use cash for high-value transactions in India with the requirement of disclosure of PAN (tax number) for high-value transactions. So therefore any transaction for your dream home will automatically would happen in the legal way.
The major problem will be faced by the unauthorized and unrecognized builder as they always deal in cash transaction. The government has taken positive steps towards the black money with this decision as the unauthorized builders and developers will vanish into thin air. This move will bring more transparency and credibility in the realty sector. The resale property market will be affected as most of the transaction takes place between two individuals.
The recognized builders and developers are always using the legal way for any transaction so this decision won’t affect them at all. This demonetization of high value is a good step in the long run as benami transaction will stop to some level. Now demand in the housing sector will see a huge increase as buyer will get to see authorized and government approved projects.
We appeal to potential home buyers to understand the long term effect and benefit of this great move and not be misled into believing that property prices will fall. Currently the real estate market is at its best possible price point with no further margin with the developers to reduce prices. Now it is the responsibility of financial institutions to enable home buying during such an optimum scenario.
Investing in gold is always risky as the prices fluctuate. Investing in real estate is always profitable; the return on investment is always high. Truly acche din for everyone.
Ten to twenty years back when black money was used to purchase land, so that unauthorized builders and developers could avoid paying tax. In the last 6-7 years government has brought many bills to fix the loophole in the system. The buyer in the primary market mostly takes mortgage from leading banks. To develop projects even authorized builders and developers have to take huge mortgage from government recognized banks so every transaction is legal.
There are rampant news articles about there being a correction in pricing of real estate by various opinion makers who seem to think they have the authority to make such claims. As an industry body representing organized real estate,we again reiterate that the industry has always been catering to the primary market which comprises of end users who aggressively avail home loans. Moreover, with this step of demonetization, banks are again going to be flushed with liquidity of approx.
15 lakh crores and will be compelled to lend aggressively .To do that ,they will have to lower interest rates. Demonetising currency has also removed surplus liquidity from the market and this in turn will result in low inflation.We expect that the RBI would definitely, in the coming months ,reduce the REPO rates by at least 2% so that a home loan would come down to at least come down to 7% .The home loan rates coming down to such levels of sub 7% in the next year or so, the atmosphere will become more like the west where home loans are available at 5%. and below.Unlike the western countries, India has a documented shortage of housing and homes,an aggressive domestic demand for real estate.This essentially means that in the presence of a lower home loan interest regime, a larger pool of home buyers would avail loans to buy the home they always wanted.This could be made possible in as soon as the next six to twelve months. The housing industry will start to grow at a rapid pace while concurrently being in compliance with transparency and fair practices like RERA (Real Estate (Regulation and Development)) .
Now any transaction above 50000 would automatically require PAN card details. It becomes quite difficult to use cash for high-value transactions in India with the requirement of disclosure of PAN (tax number) for high-value transactions. So therefore any transaction for your dream home will automatically would happen in the legal way.
The major problem will be faced by the unauthorized and unrecognized builder as they always deal in cash transaction. The government has taken positive steps towards the black money with this decision as the unauthorized builders and developers will vanish into thin air. This move will bring more transparency and credibility in the realty sector. The resale property market will be affected as most of the transaction takes place between two individuals.
The recognized builders and developers are always using the legal way for any transaction so this decision won’t affect them at all. This demonetization of high value is a good step in the long run as benami transaction will stop to some level. Now demand in the housing sector will see a huge increase as buyer will get to see authorized and government approved projects.
We appeal to potential home buyers to understand the long term effect and benefit of this great move and not be misled into believing that property prices will fall. Currently the real estate market is at its best possible price point with no further margin with the developers to reduce prices. Now it is the responsibility of financial institutions to enable home buying during such an optimum scenario.
Investing in gold is always risky as the prices fluctuate. Investing in real estate is always profitable; the return on investment is always high. Truly acche din for everyone.
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