A recent announcement by the PM hints at lower EMI's for buyers eager to own property in Noida and in other parts of India as well. According to a statement which has been made by the PM, the demonization of high denomination notes means that banks will now be ready to lend money to borrowers at a significantly lower rate than they had been willing to earlier. If such claims are true than more bank lending may lead to an economic revival in many industries including in the real estate sector in India.
The Long and Short Run Impact of Demonetization
While in the short run demonetization will hit many sectors hard, particularly real estate due to the significant exchange of black money in real estate deals, most experts agree that in the long term many industries including real estate will benefit from the demonization drive. It is expected, say insiders, that after the effects are demonetization are in full force, real estate in Noida and in other parts of India will become cheaper. Affordable housing in Noida and affordable housing in other cities is expected to become even more affordable to the lower income group segment claim experts.
The Greatest Beneficiaries
It is also often heard from experts that the salaried class and lower income groups shall directly benefit from the government's decision to demonetize high value currency notes as such households themselves have very little or no black money and because individuals from this segment of society will now be able to borrow money at lower rates from lenders.
Industry insiders however don't claim that prime real estate in Noida and other such properties in large cities will drop will in value, however it is expected that land in the outskirts of metros shall become more affordable which will lead to a lower unit cost for buyers. Land prices are also expected to correct in tier 2 and tier 3 cities.
Affordable Properties Will Become Cheaper
Today affordable housing in Noida and in other large metros is widely available in the fringes, thus lower land prices in such regions are expected to make affordable housing even more affordable to buyers who usually purchase such homes. Buyers who are interested in buying affordable flats in Noida or any other affordable property in India shall receive a dual benefit as unit costs are expected to drop due to a fall in the value of land prices and lending rates from banks are expected to come down as well.
This dual benefit will benefit builders in Noida as well since they shall see a quicker inventory turnover for new homes than they had witnessed in the past few years, particularly in the case of affordable property in Noida. The PM expects the demonetization drive to lead to an economic revival in the country in all sectors including the real estate sector in India.
The Financials of Demonetization
Due to surplus liquidity with banks who have collected far more money than they have disbursed since November 9th, many banks have brought down the interest rates on deposits by 15 to 25 basis points in bid to increase lending. Some economists expect lending rates to fall significantly over the next few months. Industry insiders believe that if banks pass on lower lending rates to borrowers, the lower interest rates charged by banks along with the earlier RBI decision to lower rates may lead to a fall in the interest charged for home loans by nearly 2 percent. Such a low interest rate could spur demand for home loans from the service class all across the country.
Conclusion
RERA along with the flushing out of the role played by black money in the countries economy has begun to already have an impact in the countries real estate landscape. Many of the largest real estate players in the country have recently begun to undertake projects to build affordable housing across the country as they expect greater demand for such homes in the future. It is not unrealistic to expect that some such new initiatives will lead to the construction of more affordable housing in Noida in the future as well
No comments:
Post a Comment