Realtors’ body CREDAI said on Saturday there is absolutely no further scope for correction in housing prices within the primary market post demonetization as rates are already ruling at the lowest level. CREDAI, however, said that the real estate industry fully and unequivocally supports the choice of the government to demonetise currency notes of Rs 1000 and 500 in the national endeavor to eliminate black money, corruption, fake currency and terror financing.
The association issued a statement stated that the primary market is funded by banks and banking institutions that are all regulated entities. As such, cash component is not an integral element of the primary market. Therefore, CREDAI denies adverse impact on the primary real estate market arising out of demonetization. Actually, the primary segment is predicted a price gain of 15% .
The government’s resolve to get rid of corruption and unaccounted money is in the interest of the common man in addition to industry and business, it said. Real estate sector contributes 7% of country’s GDP and is also the next biggest employer after agriculture. Because of the size and scale of the industry, it is imperative that Credai articulates the impact of demonetization around the industry and brings it to the understanding of the general public, it said.
After the demonetization move, banks are going to have additional funds of Rs 10 trillion. Hence, a fall in interest rates as much as 200 basis points is expected. An early sign is seen with country’s largest lender State Bank of India cutting its deposit rates by 1.75%. The tendency towards lower interest rate can also be likely to be strengthened by a low rate of inflation. Credai, comprising 11,500 developers of housing projects in India’s 166 cities in 23 states in the nation, is definitely the apex body for private real estate developers in the nation.
We see home loan rates coming down from the present level of 9.25% to less than 7% in less than one year from now, according to CREDAI. This would lower the EMI for your ultimate consumers. CREDAI expects the mop up of black money also to lead to higher tax collection and a lower rate of corporate and personal taxes from your next financial year onwards. In other words, the demonetization would put more cash into the pocket of home buyers through lower tax burden and incentives for owning a home.