Is it true that demonetization is a blessing for real estate sector?
Demonetization termed became the very reason of disorder, disarray and the burden due to the big currency note ban. But, it undoubtedly comes up as a surprisingly positive event, as India took a great leap to become the digital economy, all due to demonetization. The overall payments landscape of the country went through the complete overhaul after the Modi government banned the currency notes of 500 and 1000 last year in November. The long queues were seen in front of the bank ATMs and people felt helpless due to the scarcity of the cash, but this agony helped India to impart pace to its real state business. We will explain you, how!
The short term difficulties which caused a state of chaos helped buyers in the long run.
If we consider demonetization in term of real estate, it created short term problems for both the builders and the buyers. Small manufacturers and those in particular urban communities and small scale markets where money managing was more pervasive, generally affected by this move of the government. We witnessed the registration prices in residential went up. The susceptibility of buyers and investors increased due to the sudden chaos in the market. The organized real estate sector also faced a little demand. But, in the long term this drastically affected, changed and helped the way business is done in the real state.
The sudden accumulation of cash in banks made RBI to cut the interest rate of home loan –
People in all over India queued up and deposited almost all the big currency notes and this move overwhelmed banks with deposit. Banks which prior urged customers to put resources into deposit account abruptly wound up in a colossal flood. Not the dispense of this suddenly accumulated cash was the problem for banks and RBI made the decision to cut the interest rate on home loans so that the masses could be attracted towards real estate investment. This new scheme benefited the builders as well who were trying to get on feet due to lack of funds. The most considerable effect which demonetization made is the transparency. Bringing extra transparency in taxation is a drastic act, but it is achieved due to the demonetization.
The digitization, post demonetization helped economy become more transparent –
There is more increased transparency after the demonetization in the purchasing and making payment system of property. Prior to demonetization there was no regulation and recorded of the cash transactions, which was the reason that the government could not to levy taxes on them. This created the loophole which many people found to park their unaccounted cash using the real state business. The sudden move and almost forced move towards digitization moved India towards cashless economy. This has made it impossible to buy property using cash. The government now can easily discover frauds because by keeping a track of enormously large cashless transactions. This will certainly help consumer to have some confidence in real estate.