By Dr Sanjay Chaturvedi, LLB, PhD.
Accommodation Times News Services
Talk of the town is the effects on real estate after demonetization. Maharashtra Inspector General for Stamps and Registration in a statement said that there was a fall of almost 65% in documents to be registered in Maharashtra after 9th November 2016. At the same time, National association of builders (CREDAI) issued a statement through its president Gitamber Jain that rates are not falling. According to Real Estate Brokers, many builders have sold dead stock in old currency with a promise to settle things after 31st March 2016.
Now, all this indicator neither will have any effect on real estate sale nor on prices. Researcher houses have predicted a fall of prices up to 55% and estimates were cited as actual figures.
All those projects, especially affordable housing, taking all white / cheque payments along with major portion of housing finance were not effected as purchasers do not have black currency neither developers were asking. Hence market for affordable housing segment never was disturbed by such demonetisation. In fact, people those who has black money some what converted to real estate which is having great supply in almost all major metros. Such segment never got carried away with such trend and mass hysteria.
As far as premium housing segment, yes there were elements on cash / black money but people those who offer such properties are corporate or having sufficient time to receive cash in the books on back date. Old currency can be deposited till 31 Dec 2016. Hence old currency holders never wanted to convert their liquid cash into real estate. They went for liquid assets like gold etc. Premium housing segment too have, now a days, full white components. Corporate in real estate have already adopted policy of full cheque.
Real Estate was suffering in recession since last one year. It got nothing to do with demonetisation. In fact, studies show that real estate never got affected by Stock market booms or recessions, political uncertainty, natural calamity or economic conditions. See the example of era of Harshad Mehta, Chennai Tsunami, 13 days government of Atal Bihari Bajpai and cash crunch like currency demonetisation.
The sector has its own economics and dynamics. Demand and supply, like in any other market, ascertain the price. Buyers are waiting for right opportunity and right products. Price correction should be welcome step as more and more buyers will jump into main stream flow of property transactions.