Demonetisation may bring down resale flat prices in Mumbai
The reason — majority of these flat owners demand cash (never on record) for their transactions, which will now difficult for buyers to come up with after the high denomination notes were scrappedmumbai Updated: Nov 11, 2016 10:22 IST
The demonetisation of Rs1,000 and Rs500 is likely to result in an up to 30% fall in the prices of resale flats across the city and its vicinity, said experts.
The reason — majority of these flat owners demand cash (never on record) for their transactions, which will now difficult for buyers to come up with after the high denomination notes were scrapped.
According to Ashwinder Raj Singh, CEO, residential services, JLL India (a real estate consultancy firm), the owners would be forced to reduce the prices. “Owners will hardly get buyers to pay in cash. This will force them to bring down the prices significantly,” he said.
Currently, the resale market makes for about 25-30 % of realty sales. Majority of the owners demand cash to save on the Capital Gains tax that is levied on these transactions.
Another significant reason for the decline is that majority of the buyers for these resale flats are either businessmen or entrepreneurs who have liquid cash in hand. “The scrapping of Rs 500 and Rs1,000 currency notes have impacted these sections significantly and they can no longer do transactions in cash,” said Prakash Rohera, CEO, Kkarma Realtors, a realty brokerage firm. “The resale sector will see a shift to full cheque payments. Payments in cash will become almost negligible,” he said.
For years, the resale market has been one of the prominent sectors as buyers preferred to take ready-made property instead of investing in new projects. Another reason was the meagre maintenance cost that these properties offered, compared to the higher rates of the new ones. In cases of distress sales, the sellers would undercut the prices that benefited buyers.