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representative imagereserve Bank of IndiaExperts say the decision to phase out the Rs 2,000 currency bill could potentially have a moderate impact on high-value property transactions.
However, it is unlikely that the pace of sales will be affected significantly solely because of this change, as many developers are already inclined to avoid transactions with substantial cash components.
Experts said land transactions, especially in smaller towns and peripheral areas of big cities, may see some uptick, as suggested by the marginal increase in inquiries so far.
“The liquidity scenario for real estate developers has improved a lot due to the sharp improvement in the pace of sales after the Covid-19 pandemic. Many of them are not showing any keenness towards big cash deals, especially after the previous demonetisation. later, fearing action from the authorities,” said a property broker operating in the central Mumbai,
After demonetisation in 2016, the cash component in real estate deals has come down in major property markets, and many developers have informed their channel partners not to encourage transactions involving large cash transactions.
A Pune-based realtor said, “One of the biggest constraints is the gap between market and ready reckoner rates, which is further narrowing in many micro-markets, leaving less room to accommodate cash in property deals.” Is.”
The higher denomination currency is around 10% this time as compared to 2016 demonetisation when Rs 500 and Rs 1,000 notes were banned overnight, accounting for over 85% of the currency in circulation.
“Cash circulation is quite low and may not look as crowded as in 2016. Inquiries have been made for transactions related to residential properties and land, but builders are also cautious as most of the ED and IT raids have taken place recently,” CEO said. A broking firm in Bangalore. “To get rid of cash, some developers themselves are offering to pay cash to brokers to clear dues.”
The real estate market has been flourishing since last two years. Industry insiders said new residential sales are not showing any major impact, but many customers with pending payments are insisting on paying in cash. People in Gurgaon, Noida and Delhi are trying to use Rs 2,000 notes in secondary transactions as builders are not accepting much cash.
“Those who had pending payments are trying to make advance payments to get rid of the notes. Prior to this directive, developers were ready to accept cash, but now they are willing to pay the balance or pending amount in Rs 2,000 notes. Not more than 30% are accepting,” said a Noida-based realtor.
In a secondary transaction, when the buyer is an individual, the seller is ready to accept the Rs 2,000 note, but at some premium. For example, if a payment of Rs 20 lakh is pending and the buyer wants to pay Rs 10 lakh through Rs 2,000 notes, the seller is ready to consider it Rs 9 lakh and the remaining Rs 1 lakh as premium. I am considered. Broker. ET could not independently verify this claim.
The move resulted in efforts by buyers to finalize deals which were taking time as they were looking to access cash. Going forward, this could lead to more trades being completed in some markets.
According to brokers, the withdrawal of the Rs 2,000 note was widely anticipated as banks had already demonetised or discontinued these notes long back, and this has led to high prices in the property market in recent months. Sales also helped.
“The impact on real estate will not be like demonetisation earlier. The luxury segment will continue to do well. Also, we will see some traction in the coming quarters on land deals, which are already at an all-time high. We have seen no haven’t seen big growth reserve Bank of Indiamove,” said the managing director of a Hyderabad-based property brokerage firm.
The performance of residential real estate has been strong since the outbreak of the pandemic. Housing sales have reached new highs across markets and segments during this period.
The pace of selling hasn’t slowed even after a series of interest rate hikes that began a year ago resulted in mortgage rates from as low as 6.6% to nearly 9%.
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