New Delhi: Buying an affordable home has always been a dream for many. But, unaffordable real estate prices, difficult banking procedures, higher interest rates and requirement of huge cash often compel people to live in rented properties.
However, the Naendra Modi government's recent bold move to clamp down on black money hoarders through the ban on Rs 500 and Rs 1,000 currency notes is likely to have a positive impact on the residential market in the country.
The housing sector has always been a preferred channel for the indiscriminate use of black money. Many developers, resellers and home buyers prefer on having hard cash as a component of payment in real estate deals.
The government's sudden move to ban high value currency notes is expected to deal a body blow to this practice.
The currency ban move is also likely to put a down ward pressure on the interest rate structure, which would come as a big relief to people who cannot afford the high EMIs on housing loans.
Real estate developers and consultants feel that unorganised builders and secondary (re-sale) property market would be adversely impacted following the government's decision to demonetise Rs 1,000 and Rs 500 notes.
Housing prices could witness downward pressure, helping revive demand in the sluggish housing segment, they suggest.
"We are moving toward the cashless economy which is a sign of maturing economy. It's a step in the right direction," DLF CEO Rajeev Talwar was quoted as saying by PTI.
"The blackmoney was mostly in land purchase. But in last 6-7 years, there has been no major land buying in this sector. Big builders and organised players are already using bank channel and they would gain from this decision. Unorganised players and the secondary market would be impacted," he said.
In addition to these factors, many developers are now planning to make a foray into the affordable housing segment.
This effectively opens up another avenue for those who find themselves priced out of the housing market in metropolitan cities.
Further, with many states likely to enforce the buyer friendly provisions of the Real Estate Regulatory Act, home buyers can expect more openness in this sector.
This would also provide them protection from delays in construction and handover, as well as other unscrupulous practices employed by developers.
In the following pages, we will outline the opportunities these developments are likely to present for home buyers, and delve into the emergence of the affordable housing segment.
"This decision will help institutionalise the real estate sector," says JLL India Country Head and Chairman Anuj Puri.