These are the tough times.
The Indian economy has slowed down but that is just the dawn of a new beginning. In the long-term, the ban on the Rs500 and Rs1000 notes will bring benefits to the economy, especially to the real estate sector. For the time being, the developers are slowing down till they adjust their already earned money and the buyers are waiting to negotiate the best price to pay in cash; cash being becoming critical.
Cash is an integral part of real estate.
Even after getting a home loan on the property, the cash transactions are difficult to avoid. Moreover, in the resale market, both the seller and the buyer get the benefits on taxes and stamp duty, if payment is in cash. Real estate industry got a major setback because the secondary market is driven by the cash transactions. It is the reservoir for most of the black money in India. There had been no regulation guiding the transactions hence the lack of the transparency fueled black money accumulation. Now that the Rs 500 and Rs1000 notes are banned and the new currency would take some time come into the circulation, real estate has really gone in the stealth mode.
Somewhere it is a concern, somewhere it is not.
This is, however, a matter of concern for the people in the middle of the transaction. They have already paid the upfront amount and now the developers are not accepting the cash anymore. Some inside people, however, say that the condition of the real estate is not as bad as seen from the outside. The buyers are aware and they are making smart choices while investing in the property. The big shot builders are well-organised and the properties sold are against the loan hence, they will not be facing any issues. The small builders who try to cash in the investment in property by the night will be affected majorly by this decision.
What would happen in the future
This would majorly eradicate the black money from the Indian real estate. Either the hoarders have to declare the unaccounted money and pay the proper taxes or throw away the money. The uselessness of the fake currency notes in the denominations of Rs 500 and Rs 1000 will put a stop to the terrorism across the borders. The rural economy which is the backbone of India would get connected to the bank accounts. This is supposed to carry forward the Jan Dhan Yojna launched by Indian PM.
The real estate market would gain a momentum as the property prices are expected to go down. The developers are selling the properties at the relaxed prices owing to the slowed down market. But on the other hand, we can also see the delay in the projects as the developers depend on cash heavily. The cashless economy would be promoted and the buyers would more be interested in paying via plastic money. There are hardships now, but that time will pass. Fingers crossed for a better corruption-free future of the real estate.