Property Rates getting a fall in Delhi

Demonetization took everyone by surprise and none more so than the Delhi property market, which is a secondary market shaped around property owners who resell houses that they have got from the primary market or developers. Here the majority of the transactions occur with a part of the value of the property paid in cash. This practice has crashed down as a result of demonetization and consequently, property rates went down here, say experts at Property.Sulekha.com.

Builders and investors have been shocked and most probably in coming 6-7 months property rates are going to fall further. As of now, the rates have dropped by 25-30%. On the ground, this has been seen with property brokers saying about real estate deals getting canceled or modified owing to demonetization. For instance, a South Delhi property listed at Rs. 3.25 crore is at present being bargained at Rs. 2.25 crore, which is a severe fall and points out how prices were over-inflated in the Delhi property market.

It has been stated in a report that Delhi homebuilders will go on facing the heat as the majority of the sales of higher-end assets were made to high-net-worth individuals and investors – two types of purchasers who have been badly hit by the government’s decision.

The mainly affected are the homebuilders who have bigger exposure to projects with large-ticket premium and furthermore it is expected that homebuilders with more exposure in the NCR (National Capital Region) will be hit more severely than in other areas as NCR is more dependent on cash-based transactions. Demonetization will witness here the only further reduction in real estate demand.

Lots of transactions in the secondary market will be seen to be going down in volume. Out of ten purchasers, only one will be ready to pay the total amount in cheque. Usually, people wish to receive a minimum 20-30% of the amount of cash, and this will no longer be available now. This will as well act as a great de-motivator for persons who were creating cash to a greater extent to be capable of parking into property market all along. It will generate a great deal of transparency in the long term; but sales of the property will freeze in the short term, irrespective of land, primary properties or secondary sales. The psychological jolt is a huge one.

People will probably take up a policy of wait and watch prior to making investments in real estate on account of uncertainty in the market. And with creeping in desperation prices will fall with the little hope of rising prices soon. The greatest blow will be felt in luxury and ultra-luxury properties.