Repercussions of Demonetization on Hyderabad Real Estate Market

One of the cult decisions taken by the current Government appeared in the form of currency ban popularly known as demonetization in November 2016. This affected the whole economy of the country since most of the business sectors used currency as the method of exchange. Since real estate investments constitute a great chunk of the Indian economy, the impact of demonetization was felt in this industry as well. As expressed by the Chief Economic Advisor Arvind Subramanian, one of the primary aims of demonetization was to bring the real estate business into a transparent state and instil a standstill in the booming prices of the various properties. The currency ban has put a serious check in the cash transactions that constituted about 40 percent of the total price of the project. This transaction was made to avoid tax by the buyers and this cash was an undeclared part of the person’s wealth.

Various Hyderabad Real Estate projects were also greatly affected due to demonetization apart from all other major metropolitan cities since these are the places where investments in real estate were metered highest. The effects of demonetization on Hyderabad Real Estates were multifaceted. The initial phase saw a steep decline in the sales which was followed by a decrease in the prices and an increase in the sales.

FALL IN THE SALES

The average estimates depict that the Hyderabad Real Estate sector declined by about 40 percent in the last quarter of 2016 as compared to last quarter of 2015. The sales of Hyderabad Real Estate projects achieved the highest value in 2012 when the sales were accounted to be about 19000 and the new launches were metered to be about 22700. Since then, the numbers have declined to 21 and 49 percent in the respective sectors since then. This has led to the reduction in Hyderabad Real Estate inventory level to the lowest in a span of 6 years. However, the reduction in the new project launches well balanced with the relatively stable sales volume. The unsold Hyderabad Real Estate projects dropped to 28088 units as measured in fall 2016. The customers mostly prefer ready to move properties over the under construction ones. This makes the West Hyderabad Real Estate projects to be the most preferable ones since there are many options available in this region that are closer to the office hubs. The Hyderabad Real Estate market experienced a 56 percent downfall in the second half of 2016. Again, contrary to the housing property sales, the office space sales increased as compared to 2015. Visit https://propstory.com/home/hyderabad-real-estate/ to read in-depth about the demonetization effect on Hyderabad real estate market.

Demonetization did not, however, affect the launch rates of new projects. The new Hyderabad Real Estate project launches along with the office projects kept up their momentum. The implementation of Real Estate Regulatory Act might also have a serious impact on the new launches. The demonetization combined with RERA might lead to a severe crunch in the total supply in the near future.

A FALL IN THE PRICES

Owing to the decreasing sales, the Real Estate prices have shown a steep decline. With the rules getting stricter, the Hyderabad Real Estate developers have been striving to achieve a transparent system and thus are curtailing the surplus charges.  Earlier a majority of cash transactions include black money of the customers. This transparent system that is a by-product of demonetization ensures that the customers have to pay the actual prices only. Again the Hyderabad Real Estate developers have been shifting their focus towards affordable housing real estate projects which would result in the widening the number of customers. The affordable Hyderabad Real Estate projects aim to gravitate an increased number of customers who were not able to afford them earlier. The implementation of RERA also qualifies the quality and pricing of the real estate projects which ultimately leads to the customer paying the justified prices which are lower than the previously set prices. The prices of the various Hyderabad Real Estate projects fell suddenly after demonetization owing cash shortages and showed a steep decline since it became increasingly impossible to invest the unaccounted money in properties.

CONCLUSION

The Hyderabad Real Estate industry which was on the verge of achieving the crest position was greatly hampered by demonetization. Although the initial phase witnessed a fall in the sales and a decline in the prices, there is an expectancy that the industry will be resettled very soon. Lately, the decrease in the interest rates has been attracting more and more customers to make investments which would ultimately lead to the restoration of the earlier momentum of the Hyderabad real estate sector, thereby denoting the transience of demonetization.