While the entire business environment has been massively shaken up by the recent demonetization of the higher currency notes, Real Estate saw some abrupt impact. While it is still too early to accurately estimate the intensity of the shakeup this has caused, but its impact on the real estate sector is already quite visible. It has impacted the prices, posed heavy liquidity challenges and increased the unsold inventory. Real Estate has again gone into a wait and watch period. However, short-term pain is inevitable; the move has also brought some cheer if we look at the eventual long-term impact.
Let’s have a quick glance at them:
Cheaper home loans- The banks are flooded with funds driving down interest rates on deposits and loans. It is expected that the home loans will come down by 7-8%. All the top developers have been doing transactions in white, using the loan eligibility of an individual. With the interest in the home loans coming down to such a level, Real Estate professionals will see more of buyer interest. A home is always considered as proud investment. Gone are the days when only our parents and their parents used to buy homes. The younger generation is a key purchaser now and they rely heavily on home loans.
Lower EMI- Apartments will come within the reach of the buyer due to lower EMI, which of course comes with cheaper home loans. Now an individual who could afford an EMI of say 15,000/-, will now be looking for a property whose EMI comes between say 20,000 to 25,000 or maybe more. This will create more pool of buyers for every segment of Real Estate. It’s like getting one step closer to your dream home.
Attractive Investment- Low interest rates and EMI’s for real estate gives an overall positive boost. It becomes more attractive for both, investors as well as end users. Everybody dreams of a home. While some want to stay in the property they buy, others think of it from a pure investment point of view. The market has been full of negative sentiments, where the buyer feels that the property prices are too high and thus not affordable. Real Estate is all set to again be a top investment alternative. Your parents or their parents used to save their money and invest it in Real Estate and our generation has been reaping benefits from the same. So it might be just the right time for you to enjoy the pride of ownership of a home and gift it to your coming generations.
Greater ROI- Bank deposit gives you a return of only 5-6%, while a home gives you much more return in as simple as a rental income. If you invest wisely, taking into account the area where you are investing and the future developments around that place, your rental income from that assest not only pays your EMI, but also gives you some extra pennies. A lot of properties in good locations turn out to be holiday homes, guest houses, etc. and give you a very decent return. Plus, they create an asset and earn appreciation over a period of time at the same time getting income tax deductions.
More Buyers- Demoentization is already seeing most of the money flowing into bank accounts from people in the unorganized sectors. A lot of new people are entering the banking system, which means that they will become eligible for bank loans. Isn’t it an exciting news for everyone in Real Estate. A pool of fresh buyers and investors is being created and you can fulfil their dream of buying a home!
Improved Infrastructure- With the increased white money, the Government will be able to allocate more funds in infrastructural schemes like Smart Cities, Housing for All, Transporstion (Airways, Highways and Railways) etc. All these upgardations will lead to an increase in the demand as well as prices of properties in cities. So if you are a seller sitting in the distress that your properties price will lower down, cheer up… good times are yet to come!
The past one year has been like a roller coaster for Real Estate. There have been a few positive and potentially long-lasting changes in it. The passing of RERA (Real Estate Regulation and Development Act 2016), the Benami Transactions Act and now the demonetization move will ensure that going forward, the will become more transparent. Only players who conduct their business with integrity will survive. Buyers/Sellers will not be cheated anymore and there will be no longer need to contend with the constantly rising prices. You will now be able to buy properties of your choice at affordable prices, which will be delivered on time. It was a necessary exercise for the sector. In the long term, the Indian real estate sector will emerge stronger, healthier and capable of long periods of sustained growth.
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