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How to Understand the impact of Real estate Bill and Demonetisation on prospective home buyers

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How to Understand the impact of Real estate Bill and Demonetisation on prospective home buyers
Well, a lot of water has flown under the bridge since the Real Estate Bill became an Act on May 1 2016. And got notified on 31 Oct 2016.

And not much later, Demonetisation shook up the nation on 8 November 2016.

The million dollar question everybody is asking ...or rather, speculating is ,what is the impact of both on the real estate industry and particularly the home buyer ?

As an insider view to the situation from the perspective of a Realtor, this article seeks to invoke opinions and thoughts on the same from industry persons as well as the general public.

At the outset, my view point is that it bodes well for the industry and the home buyer. Why so ? Well let's take each one separately

1. Real Estate (Regulation and Development) Act, 2016

Following are some of the highlights of the bill
70% of unused amounts collected for ongoing projects to be kept in a separate bank account
Promoters to declare original sanctioned plans, changes made later, fresh timeline for completion of ongoing projects
Registration of projects with Regulatory Authorities incentivized by reducing fee substantially
Interest to be paid both by promoters and allottees is SBI Marginal Cost Lending Rate plus 2%
Promoters to make public a host of information and report quarterly progress to enable informed decisions by buyers

This would boost the consumer confidence in an industry plagued by delayed projects, overshooting costs, disputes on builder committed amenities and the end product etc.

Increased consumer confidence will create increased demand.

2. Demonetisation

Lack of cash availability will bring down the number of projects cropping up. Which translates into shortage of supply of potentially illegal projects
Increased fund flow into banks makes more funds available for public funding and thus bringing down interest rates
Cap on cash transactions ensure transparency of all payments to builders and makes them accountable for the money received

Overall, the assumption is that, though there could be a minor correction in prices in the short term (for developers to dispose inventory for funds inflow), there could be gradual increase in prices in medium and short term due to reduced supply (due toDemonetisation) and increase in demand(due to the Real Estate (Regulation and Development) Act, 2016 ).

However, the recent government boost for mass housing projects in the Budget 2017 presented by Finance Minister Arun Jaitely on 1st February 2017 - which seeks to give infrastructure status to budget housing and increase the carpet area from 300 Sqft to 600 sqft for mass housing projects - will see enough inventory coming up in that segment to keep the prices at rational levels.

This heralds a good time for the real estate industry as well as the stake holders like the Developers, Agents , Buyers and Sellers in the days to come.


AUTHOR : Anit%20Gopinath
POSTED ON : 2017-02-05 00:00:00

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