Soon after the demonetisation announcement last year on November 08, many people had pronounced that the note ban will result in a colossal damage to the Indian real estate sector.
The realty sector was riddled with huge concerns about uncertainty, people losing their home ownership appetite, dwindling and subdued demand. It was being said that demonetisation effect on the real estate sector would remain for years to come.
Cut to November 08, 2017, 365 days after, the result of demonetisation on the realty sector has been robust.
The figures have debunked the general misconception of demonetisation on the real estate sector. The cash ban resulted in a unique phenomenon and people saw many positives of the move.
Data from the Reserve Bank of India (RBI) showed the House Price Index (HPI) during the demonetisation quarter increased across the country.
The RBI Database on Indian Economy displayed the HPI for 10 Indian cities- Delhi, Mumbai, Bengaluru, Chennai, Kolkata, Lucknow, Ahmedabad, Jaipur, Kanpur and Kochi- at the all-India level.
The HPI for All-India increased to 240.2 in Quarter 3 2016-17 from 234.9 in the previous one (Q2 of 2016-17), in which Kanpur witnessed the maximum increase.
“This may have happened as property holders rushed to register their properties at prices closer to the market rate. They did not want to come under scrutiny and moved to make their properties legitimate,” said an industry expert Siddharth Singhania.
In fact, demonetisation improved real estate landscape, improving the rental market in both residential and commercial spaces.
“The affordable housing remained largely unaffected and the demand in this category will shoot up only. The real estate sector is getting cleaner coupled with other landmark reforms. The note ban set the realty sector on course to become demand rich, corruption-free and organised,” said Singhania.
Even the real advisory firm, PropTiger.com, backed RBI’s findings, saying the real sector revived after the note ban.
It stated the residential markets showed healthy levels in Q4 in FY17 as it was driven by the affordable housing segment which has found favour after getting infrastructure status.
Several reports show that the real estate sector was not muted after demonetisation and the future looks promising too.
Experts say the outlook is positive and real estate sector will see genuine buyers. Expectations are that the home loan rates will drop and the sector would witness capital inflows.
“Investments will grow in the market and real estate sector would usher in a new era,” said Singhania.
Demonetisation has certainly infused freshness in the realty sector which is expected to go only in upward direction.