One Year of Demonetization: Effect on Real Estate Sector

Now the situation has come back somewhat to normalcy in one year as far as after effects of demonetization are concerned. Due to drastic changes in the system in the last one year, in the initial few months sales went down as everyone was busy grasping and adapting to the after effects of demonetization in Real estate and all walks of life. In the later months also the sale volumes of High end and mid segment did not pick up due to the changes brought about by RERA and GST coupled with the after effects of demonetization. Following the wait and watch policy buyers are letting the new changes settle down first. In the mean time, the demand for Affordable housing has soared in the last one year. The effects of Demonetization on property segment may be divided in two major categories-Short term and Long term effects. In the last one year, the short term effects are slight slowdown of sale and purchase in properties and this may continue till the prevailing situation coupled with RERA and GST normalizes but once the things come back to normalcy, the long term effects may be beneficial for the end-users. After the demonetization step having been taken, the fund flow in banks is increasing which is going to have a positive effect as far as banks giving housing loans are concerned. It is expected that the bank housing loans’ interest rates may fall due to increased fund flow in banks and getting the bank housing loans may become cheaper. Positively predicting such a scenario, this may prove beneficial for the buyers and shall inculcate more interest in purchasing property. The low interest rates if they happen will create more enthusiasm in buyers and more buyers shall go for the buy in the situation of low interest rates and housing loans becoming cheaper. The Real estate sector market is basically having different segments like the primary and the secondary market. The secondary market is considered as the resale market. The effects of demonetization have brought a slowdown in the resale market or secondary market and it may give a boost to the primary market. The real estate sector may also be divided into the organized sector and the unorganized sector. Here also the effect of demonetization is that it is bringing more transparency in the organized sector and shall be a blow to the unorganized sector bringing its breakdown.’