Owning a luxury home is a dream for most city dwellers. High interest rates for home loans and excessive property prices have almost always been stumbling blocks while purchasing property in India. But, if the recent economic activity over the past 6 weeks is any indicator of better times to come, then it would be safe to state that the demonetisation drive seems to point towards a more favourable market for home buyers. Combine this with the recently passed Real Estate (Regulation and Development) Act of 2016, home buyers can expect property prices to get pocket-friendlier than before.
According to Ashwinder Raj Singh, CEO – Residential Services, JLL India, the demonetisation drive was essential in order to regulate the real estate sector in India, which has over the years witnessed large scale transactions involving black money. The property market can begin to expect some much-needed corrections since investors who would formerly invest with unaccounted money, causing a hike in property prices, will now be eliminated from the system.
With banks cutting lending rates, home loans will get cheaper and come as a relief to those who have been shying away from home loans. Buying a much-cherished home will now be a more achievable task for a large number of Indians. In fact, property registrations in Maharashtra grew by over 29% in December 2016 as against the temporary setback in November 2016, upon the announcement of demonetisation. Pune alone recorded a 33.8% increase in registrations, from 15,241 in November to 20,393 in December 2016.
The fight against black money will also build an enhanced level of credibility of Indian Real Estate leading to positive economic sentiments. Says Anuj Puri, Chairman and Country Head, JLL India, “Improved market transparency and a positive government attitude about policy reforms will play a major role in attracting foreign investment into the realty sector”.
While in the short term the effects of demonetisation seem rather unflattering, experts are optimistic that over the long term, the real estate sector in India will greatly benefit from this economic revolution. On an optimistic note, Singh adds, “Over the long term, the Indian real estate sector will emerge stronger, healthier and capable of long periods of sustained growth”.