An unwarranted fear has gripped the nation since the announcement of demonetization by the PM. This, however, can bring radical changes in certain sectors, real estate being one of them, in the long run. The industry stands to gain in the form of a more transparent and organised environment, as well as, better finance options owing the revenue generated by the influx of cash in the banks. There is also good news for home buyers as the move has placed the consumers in a favourable position with several factors working to their advantage.
1. Lower Home Loans – The demonetization move has increased the cash flow into the banks, thereby, making the money more organized and traceable. This, in turn, has affected the home loan interest rates, which have dropped significantly, thus allowing almost everyone to avail these low-interest loans and bringing them one step closer to owning their own homes. The deflation due to better liquidity will also have some effect on the prices, making it stable and affordable. The Reserve Bank of India will also have ample leg room to bring down the repo rates. The Rupee is also expected to gain some momentum thus giving consumers more power to purchase.
2. Restoration of dormant projects – Cash crunches had led several projects to a halt, which can now resume and pick up the momentum from where they left off. The cash flow in the banks will lead to better loan availability for the industry, at revised rates which will bring some relief to the consumers.
3. Infrastructural development – Demonetization has led to more accountable transactions which in turn have yielded better tax revenue. The GOI will thus have more resources at its disposal and may well be investing in the infrastructural development of the country. Providing connectivity to the consumers who have invested in affordable housing projects in town peripheries will gain from the development. This will also have a positive impact on the development of rural areas, which will see a significant rise in the real estate sector.
4. Transparency in the buying/selling process – The Demonetization move has led to major switch to the cashless paradigm. Consumers are more likely to use alternate modes of payment which will be traceable thus increasing the transparency of transactions. The modes of transaction will also help the consumers in terms of ease of use and save time as well. This will lead to an increase in real estate purchases among the yuppie generation.
5. Consumers’ Market – The Demonetization move has made the consumers more aware about their spending habits. However, real estate is a safe bet as the lower interest rates on the loans, will put them at an advantage. Buyers need to make the most of this opportunity and invest in real estate. They can rest assured because this move has put them in the driver’s seat.
