MUMBAI|BENGALURU: Real estate sales have come to a standstill across key markets and fallen in some places by nearly 20% in the last 50 days following the government’s demonetisation of high value notes on November 8. Both demonetisation and fear of action under Benami Properties Transaction Prohibition Act have dissuaded investors, while end-users are waiting for interest rate cuts and prices correction following demonetisation.
While the crackdown on Benami properties is likely to be fraught but authorities would look to match income levels with property value to establish ownership of disproportionate assets. Property brokers say home buyers are now waiting for the Union Budget and expect tax benefits apart from reduction in housing loan rates. “Markets including north India’s tier I and II cities, Rajasthan, Madhya Pradesh, Gujarat and Kolkata have experienced an estimated 15-20% hit on sales during the last quarter ending December 31.
Specifically, during these 50 days following the currency ban… the number may have increased to 30%. In Western and southern cities, the impact was relatively lesser,” said Pankaj Kapoor, MD, Liases Foras Real Estate Rating & Research. “Post November 8, there was no activity across markets and right now, the market is in reset mode while preparing for new methods and clear designs.”
Kapoor expects the sluggishness in market to continue until actual reduction in interest rates and property prices that could be a reality in the next few months.
The government recently amended the Benami Transactions (Prohibition) Amendment Act, 1988. Any violation of the act will be punishable with imprisonment of up to seven years and confiscation of the property without any compensation to the owner. The act will cover movable, immovable, tangible and intangible properties and includes any right or interest in such property.
Credits ET Realty