Play of demonetisation: Chandigarh’s realty market in wait-and-watch mode

It’s been more two weeks since Prime Minister Narendra Modi announced the demonetisation of Rs 500 and Rs 1000 notes, but, those with stakes in the city’s realty market are yet to get to grips over the end of the ‘cash’ element.
By HT Correspondent | Hindustan Times, Chandigarh
UPDATED ON NOV 24, 2016 01:50 PM IST

It’s been more two weeks since Prime Minister Narendra Modi announced the demonetisation of Rs 500 and Rs 1000 notes, but, those with stakes in the city’s realty market are yet to get to grips over the end of the ‘cash’ element. The panic has subsided, but uncertainty prevails, say experts. Home prices continue their downward slide. Demonetisation is adversely impacting not only the new negotiations on property, but even the older ones made before demonetisation.

PRICE CORRECTION: BY HOW MUCH?

Besides the distress sales where the home price fall is even up to 50%, “... In most locations house prices have already fallen by at least 15-20%,” says Sanjay Arora, a city-based real estate consultant.

In SAS Nagar, “IT City residential plots, which were being sold on a premium over the allotted price, no longer fetch a premium. The premium was being paid in cash,” says DS Benipal, a SAS Nagar based real estate consultant. A similar story is reported in property values in neighbouring Panchkula.

‘CORRECTION DUE’

Owning a property is getting cheaper for sure, but, by how much is still open to conjecture. For most local realty experts, a correction of 20-30% is to be expected in the next few months. Other peg the quantum of price fall relative to the prevalent collector rates. “Larger the gap between the collector rate and the market price, larger will be the price corrections. In Chandigarh, this gap is around 20% to 25% in the residential segment. In SAS Nagar and Panchkula, this gap ranges between 40-60% depending on location, and so the price reduction can be more in these cities than Chandigarh,” says Rajesh Walia, ex-president, Property Consultants Association, Chandigarh. Collector rate is the minimum price that the seller and the buyer must declare for the transaction to be legalised and registered by payment of stamp duty and registration charges.

OLD DEALS FALLING APART

In deals where earnest money is already paid, disputes are arising regarding the new terms of payment. “Sellers and buyers are failing to renegotiate the new price. Sellers are also refusing to accept the old notes. Similarly, many buyers asking back earnest money or refund of money paid and are also not accepting the old notes. Ironically, they are insisting on repayment by cheque. Most old deals have collapsed,” says Benipal.

WAIT AND WATCH

The initial panic and distress sales has given way to wait and watch policy. “Buyers and sellers aren’t sure what is the correct price. So most are adopting a wait-and-watch policy,” says Arora.

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