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Housing sales have gone down marginally by 1% in <a href="http://www.businessinsider.in/thelife/real-estate/property-rates-in-top-eight-indian-cities-have-fallen/articleshow/57573937.cms">eight major cities</a> of India, falling to 28,131 units during January-March as compared to the previous quarter. This indicates at the demand for housing units slowly recovering from the impact of <keyword id="3315394" type="UNKNOWN" weightage="100" keywordseo="demonetisation">demonetisation</keyword>. Also read: <a href="http://www.businessinsider.in/financial-institutions-were-hit-hard-by-demonetisation-but-heres-why-bfsi-has-still-managed-to-sail-through/articleshow/57631451.cms">India's financial institutions were hit hard by Modi's demonetisation move, but here's why BFSI still managed to sail through</a> During the previous October- December quarter, housing sales stood at 28,472 units in Gurugram, Noida, Mumbai, Kolkata, Hyderabad, <a href="http://www.businessinsider.in/future-of-business/the-most-popular-parts-of-delhi-mumbai-and-bengaluru-where-people-invested-in-real-estate-in-2016/articleshow/56503428.cms">Bengaluru</a>, Pune and Chennai, as per data from the <keyword id="6354553" type="COMPANY" weightage="100" keywordseo="real-estate">real estate</keyword> data, research and analytics firm PropEquity. The report adds that launches of new homes fell 19.46% in the Q4 of 2017 to stand at 22,897 units from 28,428 units in the Q3 of 2016. "Overall the fall in demand and new launches of residential projects slowed down in the Q1 as impact of <a href="http://businessinsider.in/topic/demonetisation">demonetisation</a> on the real estate sector tapered down faster than the expectations," PropEquity said. Talking of <a href="http://www.businessinsider.in/thelife/real-estate/Stagnant-property-prices-cheer-home-buyers-become-headache-for-investors/articleshow/52201283.cms">prices</a>, housing prices declined by 1.67% to Rs 6,185 per sq ft as against Rs 6,290 per sq ft during the period under review. The report is hopeful about the coming months, saying that the housing supply would slowly pick up. (Image source)

Housing sales fall by 1% in top eight Indian cities

If you are looking to invest in real estate or <keyword id="35511" type="UNKNOWN" weightage="20" keywordseo="buying-property">buying property</keyword> for personal use, now could be the best time to do so. The reason, you ask, is the sharp dip in property prices across top eight <keyword id="115307" type="ORGANIZATION" weightage="20" keywordseo="Indian-cities">Indian cities</keyword> last year. 
 
Also read: <a href="http://www.businessinsider.in/Where-isIndia-buying-its-property/articleshow/48019090.cms">Where is India buying its property?</a> 
 Global property consultant <keyword id="63735" type="CITY" weightage="20" keywordseo="Cushman-Wakefield">Cushman &amp; Wakefield</keyword> has brought out a report, which says that the ticket size of new launches across <a href="http://www.businessinsider.in/Heres-why-property-is-going-to-be-a-lot-cheaper-after-demonetisation/articleshow/55544595.cms">top eight Indian cities</a> has seen an average decline of 14% y-o-y. There could also be some changes in the prices of new units this year, owing to developers considering either lower effective ownership costs or enhanced affordability for buyers. 
 
Also read: <a href="http://www.businessinsider.in/report-card-how-demonetisation-crippled-indias-real-estate-sector/articleshow/56646656.cms">How Demonetisation crippled India's real estate sector and the difficult job in front of Budget 2017</a> 
 
"After demonetisation, the markets have witnessed a slow uptake of residential properties because of price and value mismatch. Consequently, developers are also relooking at their strategies to create better value for home buyers," Anshul Jain, MD at Cushman &amp; Wakefield India, told ET. 
 
Statistically speaking, the total number of new housing units last year declined by 11% to reach about 113,000 units. The middle-income housing segment constitutes for 56% of this number, followed by value housing at 32%. The high-end segment, on the other hand, suffered the most by <a href="http://www.businessinsider.in/the-real-estate-industry-got-hurt-real-bad-thanks-to-demonetization/articleshow/57107890.cms">demonetization</a>, and the number of new launches fell by half to reach 12,000 units. 
 
Also read: <a href="http://www.businessinsider.in/Heres-why-property-is-going-to-be-a-lot-cheaper-after-demonetisation/articleshow/55544595.cms">Here's why property is going to be a lot cheaper after demonetisation</a> 
 
In already launched projects with unsold units, heavy discounts and other funding plans are being offered so that buyers can be attracted and there can be some movement in the otherwise still projects. 
 
(Image source: Lionel Trains)

Property rates in top eight Indian cities have fallen

The <keyword id="6543013" type="UNKNOWN" weightage="20" keywordseo="real-estate-sector">real estate sector</keyword>, which was already not facing any momentum, has been hit hard due to <keyword id="3315394" type="UNKNOWN" weightage="20" keywordseo="demonetisation">demonetisation</keyword> also. 
 Post demonetisation, home buyers are waiting for correction in <keyword id="35507" type="UNKNOWN" weightage="20" keywordseo="property-prices">property prices</keyword>, which is why developers have stopped getting queries too. 
 
In a bid to revive the property demand, the developers have started assuring home buyers of compensation, if prices go down. 
 
Apart from this, deals in the secondary market have also come down. 
 
Prakkash G Rohiira, director, Karma Realtors, a property brokerage operating in Mumbai, told ET most homebuyers are in a wait-and-watch mode because they expect prices to come down. "This expectation is drawn out of confusion, and not out of clarity. Realty developers are trying o provide stimulus to the market with price-guarantee schemes so that he market gains momentum. Enquiries for projects offering price guarantee schemes have improved over the last few days," Rohiira told ET. 
 
"With reduction in interest rates of anywhere between 1% and 2%, EMIs will go down by 10-15%, which will be a massive boost to all consumers. We are confident prices will not go down. On the contrary, demand for good quality development by Grade A developers will increase. To give customers the confidence that we actually believe in this, we are happy to provide a guarantee that there will be no such reduction in prices, and if in the next three months there is any, we will pass on the benefit to them," Abhishek Lodha, MD, Lodha Group, told ET.

Demonetisation has hit real estate sector hard, builders are willing to compensate to attract buyers

The volume of property enquiries and transactions across the Indian market has dropped dramatically ever since <keyword id="6354814" type="UNKNOWN" weightage="20" keywordseo="prime-minister-Narendra-Modi">Prime Minister Narendra Modi</keyword> announced <keyword id="3315394" type="UNKNOWN" weightage="20" keywordseo="demonetisation">demonetisation</keyword> of the Rs 500 and 1000 notes. This accounts for roughly 87% of Indian currency. 
 Broker Ajay Baijal lamented yesterday that he did not receive a single sales call across the weekend in Gurgaon. On the other hand, Yasser Rahman, Secretary, Chennai <keyword id="6354553" type="COMPANY" weightage="20" keywordseo="real-estate">Real Estate</keyword> Agents Association, said that there was not much change in sales volumes in the city which was already facing a slowdown. Developers in Hyderabad maintain that its business as usual and the property prices have already fallen to an extent that they will not be impacted by the demonetisation. 
 
So, what should you do if you had intended to buy a house? The end user and serious consumer has never had it so good. After two years of slowdown, the price of property was already very close to 2012 values, indexed to inflation. The number of buyers have shrunk as those who paid in cash have been edged out of the market. The number of sellers in the secondary market may have shrunk a little but many sellers do not want to wait it out in the market. There is a vast amount of new properties available in the growth corridors along highways and expressways in every city. 
 
The Prime Minister and Finance Minister have said that prices of property would fall. Let’s examine why. At least 50% or more of transactions in markets like NCR were dealt in cash in the secondary market. Finance Minister Arun Jaitley said at the India Economic Conclave recently, “For the past 70 years, the parallel economy in cash was normal. However, with demonetisation, there will be a new normal in India and that will be just formal finance.” 
 
For a country and a market that is unused to this new normal, it will take time for this vacuum to be filled. No cash could result in fewer buyers which also means values dropping by about 10-15% to accommodate the new situation. This will take at least six months to happen. However, the rate of transactions is expected to drop. 
 
If you are a serious end user, turn this uncertainty to your advantage. Secondary market properties are either in well-lived in areas with adequate social and transport infrastructure or they are near completed properties in new complexes that are being sold by investors. Neither category can forget that the market has a surplus of ready-to-move-in properties. Many cities have inventory overhang of upto 36 months. That should allow serious end users to jump in and start negotiating the best prices. For sellers in the secondary market, vast volumes of property in the primary market is a big threat. With the absence of cash in the economy, their only option is a quick sell now to interested users. Sale price has to be close to guideline values to avoid the taxman’s eye. 
 
In primary properties from developers, ask for meaningful discounts like fittings and fixtures and maybe a drop on Preferred Location Charges (PLC). These help in your purchase value. 
 
If you are a seller, be rational. Guideline values can be a good way to assess your sale price. Sell to those with formal finance from banks. Bank assessments will tell you the current estimated value of the property. That should also help you along. Consumer sentiment is expected to pick up after the first fear and panic settles down. However, by that time the number of developers completing their property will also rise. Today’s consumers prefer new secure complexes packed with features and amenities and you may find it difficult to sell. 
 
So when a serious buyer comes your way, look for the best price you can extract and go for the sell. 
 
(The article is authored by Jayashree Kurup, Head, Editorial and Advice, Magicbricks. You can reach out to her at jayashree.kurup@timesgroup.com and tweet: @jkurup)

Demonetisation: It’s a buyer’s market, step in confidently and look for bargains

<keyword id="6355261" type="POSITION" weightage="20" keywordseo="Finance-minister">Finance Minister</keyword> <keyword id="42575" type="PERSON" weightage="100" keywordseo="Arun-Jaitley">Arun Jaitley</keyword> today said demonetisation and GST will make cash transactions a lot more difficult and lead to greater compliance as well as expansion of tax base, according to PTI. <keyword id="6390789" type="COMPANY" weightage="20" keywordseo="Jaitley">Jaitley</keyword> said the government has come out with laws to contain overseas black money as well as those dealing with domestic black money and cracking down on shell companies. The minister said the country had reconciled to a Indian normal -- a very large number of tax non-compliance and very large amount of transaction which took place outside the system. "There was almost a helplessness in trying to deal with the situation. Every year through the <keyword id="123776" type="ORGANIZATION" weightage="20" keywordseo="Finance-Bill">Finance Bill</keyword> we would announce some changes which at best had a marginal impact. I think the lasting impact of those marginal changes was not very significant. "And therefore, steps had to be taken in order to make a very significant impact," he said, adding that seen in totality, the steps taken by the government will have a "great long term impact" and a "substantial ethical rationale" behind it. "Nimpact of the demonetisation exercise coupled with the GST exercise, which is going to make generation of cash a lot more difficult, will certainly lead to greater compliance, greater digitisation. And the first signs of greater digitisation, expansion of the tax base of direct and indirect taxes is already visible," Jaitley said. Speaking at the <keyword id="866014" type="UNKNOWN" weightage="20" keywordseo="Delhi-Economics-Conclave">Delhi Economics Conclave</keyword> organised by the <keyword id="47209" type="ORGANIZATION" weightage="20" keywordseo="Finance-Ministry">Finance Ministry</keyword>, he said the first significant step taken by the government, which shook the system, was penal action against those who stashed money abroad. He said one easy format of subversion has always been the shell companies, which are created by multi-layering of companies. "This had almost become standard operating procedure and this was not only used by businesses but was used to round trip corruption money by politicians, by civil servants," the minister added. Jaitley said not only the detection of this but the decision to invoke the benami property law in acquiring these assets by the state is going to be a big deterrent and already revenue department has started doing that. "The sooner this business of routing this money through the shell companies does collapse, I think the better it is going to be for the formal economy for this country," he said. The amended benami property law, Jaitley said is "sending shiver down the spine" of those who conventionally used this methodology of round tripping of tax avoided money or corruption money and bringing it back into the system. Goods and <keyword id="645517" type="COMPANY" weightage="20" keywordseo="services-tax">Services Tax</keyword> (GST), rolled out on July 1, is the biggest taxation reform since Independence and is expected to boost GDP growth and help tax evasion as every transaction in the value chain gets recorded digitally. The demonetisation of 500 and 1000 rupee announced on November 8, 2016, has suck out over Rs 15 lakh crore worth old currencies from the system and move was aimed at cracking down on black money holders. <keyword id="1252" type="ORGANIZATION" weightage="20" keywordseo="Post">Post</keyword> demonetisation, the government has taken many steps to encourage digital transaction.

Demonetisation, GST to widen tax base, make cash dealing difficult: FM Arun Jaitley

A study conducted by <keyword id="1125471" type="COMPANY" weightage="20" keywordseo="India-Mortgage-Guarantee-Corporation">India Mortgage Guarantee Corporation</keyword> (IMGC)-Kantar IMRB revealed <keyword id="25903" type="ORGANIZATION" weightage="20" keywordseo="Indians">Indians</keyword> have to pay too much housing loan interests, which makes them reluctant to <a href="http://www.businessinsider.in/Home-Buyers-May-Soon-Get-90-Loan-In-India/articleshow/33163130.cms">take loans</a> and dig into their savings in order to own a house. 
 
Also read: <a href="http://www.businessinsider.in/Home-buyers-fighting-fraud-builders-in-courts/articleshow/50575376.cms">Home buyers are now fighting fraud builders head-on</a> 
 
The study also showed that people in the age bracket of 25 to 44 years in smaller towns are much more interested in affordable housing as compared to their counterparts in metros and mini-metros. 
 
"Housing sector is poised for a higher growth, especially in affordable housing segment by the <a href="http://www.businessinsider.in/Stagnant-property-prices-cheer-home-buyers-become-headache-for-investors/articleshow/52201283.cms">Housing-for-all</a> by 2022 Mission and infrastructure status accorded by government, apart from various other measures," said Sriram Kalyanraman, MD&amp;CEO, <keyword id="152130" type="COMPANY" weightage="20" keywordseo="National-Housing-Bank">National Housing Bank</keyword>. 
 
Out of the people surveyed, around 38% said that interest rates on housing loans are too high, while an equal number of respondents said that they don’t own a house owing to low savings and hesitation in taking loans. 
 
Also read: <a href="http://www.businessinsider.in/markets/economy/tax-collections-will-exceed-rs-17-lakh-crore-despite-demonetisation-arun-jaitley/articleshow/57773980.cms">Tax collections will exceed Rs 17 lakh crore, despite demonetisation: Arun Jaitley</a> 
 
Other than these, factors like higher property rates (32%) and insufficient loan availability (32%) too contribute in discouraging home buying plans. 
 
Talking of the effects of <a href="http://www.businessinsider.in/post-demonetisation-debit-cards-have-replaced-credit-cards-in-the-market/articleshow/57850201.cms">demonetisation</a>, Kalyan said that because of alternative currency going out, property rates have fallen. 
 
Also read: <a href="http://www.businessinsider.in/the-fate-of-note-ban-helpline-depends-on-one-call-from-the-government/articleshow/57935324.cms">The fate of note ban helpline depends on one call from the government</a> 
 
The survey, which was conducted in two phases, had a sample size of about 4,100 respondents from metros, mini metros and towns combined. The respondents, divided into 25-34, 35-44 and 45-55 years age groups, either had home loans or had applied for the same. 
 
(Image source: Finance Buddha)

Indians pay too much interest on home loans, reveals study

Even though India’s <keyword id="6354553" type="COMPANY" weightage="100" keywordseo="real-estate">real estate</keyword> industry went through a deep slump post <a href="http://www.businessinsider.in/topic/demonetisation">demonetisation</a>, looks like the effects have started to wear off, at least in the top eight cities of the country. As per data from Liases Foras Real Estate Rating &amp; Research, a well-known housing and real estate data agency, primary residential sales across these cities rose 21% in the first quarter of 2017, selling about 61,214 units, up from 50,788 units in the previous quarter. Also read: <a href="http://www.businessinsider.in/India-is-set-to-witness-a-housing-boom-worth-1-3-trillion-and-it-would-CHANGE-the-economy-like-never-before/articleshow/58590215.cms">India is set to witness a housing boom worth $1.3 trillion, and it would CHANGE the economy like never before</a> The leading cities in this road to recovery were <keyword id="6354925" type="COMPANY" weightage="100" keywordseo="Kolkata">Kolkata</keyword>, Hyderabad and Ahmedabad, with respective growth rates of 47%, 43%, and 30%. However, the year-on-year growth was still 5% lower, primarily because of weak market in Chennai and <keyword id="6354321" type="CITY" weightage="100" keywordseo="Bengaluru">Bengaluru</keyword>, with sales falling 44% and 35%, respectively. Also read: <a href="http://www.businessinsider.in/RERA-is-a-game-changer-for-real-estate/articleshow/58629172.cms">RERA is a game changer for real estate</a> Talking of <a href="http://www.businessinsider.in/You-can-buy-a-home-in-Delhi-NCR-withinyour-budget-Heres-how/articleshow/57704483.cms">Delhi NCR</a>, the region contributed the most with sales of 14,983 units, after which <keyword id="6361772" type="ORGANIZATION" weightage="100" keywordseo="Mumbai-Metropolitan-Region">Mumbai Metropolitan Region</keyword> ranked second with 14,505 units, registering respective growth rates of 24.5% and 23.6%. "The impact of <keyword id="3315394" type="UNKNOWN" weightage="100" keywordseo="demonetisation">demonetisation</keyword> was transitory as it did result in subdued disbursement growth, particularly in the third quarter and part of the fourth quarter of the financial year under review. But by the end of the financial year, the individual disbursement growth trajectory began normalising," said <keyword id="6419588" type="PERSON" weightage="100" keywordseo="Keki-Mistry">Keki Mistry</keyword>, CEO of HDFC. Also read: <a href="http://www.businessinsider.in/Remonetisation-substantially-completed-will-expand-tax-base-Jaitley/articleshow/58576226.cms">Remonetisation substantially completed, will expand tax base: Jaitley</a> He added that even though the market has just bounced back to normal, this is be the best time to buy residential properties because of lower interest rates, declining property prices in some cities and government incentives.

India's top eight cities saw 21% surge in home sales in last quarter

For many city dwellers, owning a home is always a distant dream. Unaffordable <keyword id="6354553" type="COMPANY" weightage="100" keywordseo="real-estate">real estate</keyword> prices compel them to stay in rented properties instead. However, the government’s surprise move to clamp down on black money hoarders through the ban on Rs 500 and Rs 1,000 currency notes is expected to have a cooling effect on certain pockets of the residential market in the country. 
 The <keyword id="189423" type="UNKNOWN" weightage="100" keywordseo="housing-market">housing market</keyword> is a hot-bed for the indiscriminate use of black money. Many developers, resellers and homebuyers insist on having hard cash as a component of payment in real estate deals. 
 
The recent ban on high value currency notes is expected to deal a body blow to this practice. Another likely side effect of the move is a down ward pressure on the interest rate structure. This would come as a relief to people who cannot afford the high EMIs on housing loans. 
In addition to these factors, many developers are also aggressively turning towards 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, homebuyers can expect more transparency. 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 homebuyers, and delve into the emergence of the affordable housing segment. 
 
Industry experts believe that the housing market will experience a lull in the coming months, as these developments take their toll. Homebuyers can expect property prices to come down in certain pockets, which would provide an opportunity for them to make their move

Here's why property is going to be a lot cheaper after demonetisation

<keyword id="3966854" type="UNKNOWN" weightage="100" keywordseo="kishore-bhajiawala">Kishore Bhajiawala</keyword>, a Surat-based tea and snacks vendor who in recent years also turned financier owns property worth Rs 650 crore, as was found out by <keyword id="6354751" type="COMPANY" weightage="100" keywordseo="Income-Tax">Income Tax</keyword> officials searching his house. 
 
A senior Income Tax official, close to the development, said: "So far information on property in name of Kishore Bhajiawala, his family members and associates worth over Rs. 650 crore has been unearthed. 
 
"Over 50 kg of silver, Rs. 1.39 crore worth of diamonds, over Rs. 6.5 crore in cash and several kg of gold have been found stored in multiple lockers." 
 The department began investigations into his bank accounts, lockers and other property last week, after Bhajiawala deposited over a crore of rupees in his account after <keyword id="3315394" type="UNKNOWN" weightage="100" keywordseo="demonetisation">demonetisation</keyword>. 
 
Bhajiawala and his family members were found to have more than 40 bank accounts. Sources have also claimed that more unaccounted money could be expected to be unearthed from him.

Meet the Gujarat tea-seller who has 40 bank accounts and property worth Rs 650 crore

The monthly average housing sales fell 40 per cent during November-December period in the top nine cities as customers deferred their decision to buy homes on expectation of fall in prices after the demonetisation move, according to realty portal PropTiger.com. 
 
The News Corp-backed portal, which recently merged Housing.com with itself, tracks primary residential markets of nine cities -- Gurgaon, Noida, Mumbai, Pune, Bengaluru, Hyderabad, Chennai, Kolkata and Ahmedabad, according to the PTI. 
 
"Before demonetisation, the monthly average residential sales and launches during July-October months were at around 19,000 units and 18,000 units, respectively, which were affected drastically on account of currency demonetisation. 
"The monthly average sales and launches were reduced drastically during November-December months by 40 per cent and 49 per cent respectively," PropTiger said in its latest report 'Realty Decoded Q3 FY17'. 
 
The government had announced the demonetisation move on November 8, raising hopes of sharp fall in prices in property market, especially secondary or resale segment. 
 
Housing sales across these nine cities declined by 20 per cent to 43,512 units during October-December quarter of this fiscal from 54,721 units in the previous quarter. The pace of decline in overall sales activity over previous quarter is the highest in the past 12 quarters, it said. 
 
The third quarter started on a strong note with October showing a strong performance, but November and December were deeply impacted by the demonetisation drive. The October month contributed about 50 per cent of the sales in the quarter. 
 
Among cities, Gurgaon, Noida and Ahmedabad showed a 30 to 40 per cent decline in sales in the third quarter of 2016-17 over the previous quarter. 
 
Mumbai, Hyderabad, Bengaluru and Chennai witnessed around 20 per cent fall in sales during the same period, while Kolkata and Pune recorded the lowest levels of fall at 8 and 12 per cent, respectively. 
 
On supply, the report said the launches of new homes fell in nine cities during October-December quarter due to decline in sales, stagnant prices, pressure on soaring unsold inventory and a liquidity crunch. 
 
Total launches in the third quarter of this fiscal fell by 8 per cent to 43,253 units compared with 47,032 units in the previous quarter, indicating the reduction in activity levels across the primary residential markets. 
 
"Overall sentiments were negative during the quarter with customers largely resorting to wait and watch strategy in expectation of a steep fall in prices," the report said. 
 
Developers were focusing their efforts to lure customers by offering additional freebies such as jewellery, electronic items, automobiles, holiday package and appliances on the purchase of housing units, it added. 
 
Builders also offered price guarantee, rental assurance, subvention and buyback schemes to bring confidence in the sector.

The real estate industry got hurt real bad, thanks to demonetization

India's housing market was among one of the sectors that took a big hit when Prime Minister <keyword id="6354477" type="PERSON" weightage="100" keywordseo="Narendra-Modi">Narendra Modi</keyword> shocked one and all scrapping Rs 500 and Rs 1000 notes as legal tender. 
 
While it was known that demonetisation would adversely affect the property market, what we weren't aware is the extent of the damage caused. 
 According to a <keyword id="151748" type="CITY" weightage="100" keywordseo="Knight-Frank-India">Knight Frank India</keyword> report, Demonetisation brought the housing market to an absolute standstill during October-December last year, with the Delhi-NCR market hit the hardest. 
 
Sales volume dropped by 53 percent to 6,765 units in the fourth quarter of 2016 while new launches fell by a massive 73 percent in Delhi NCR. 
 Knight Frank which tracks the primary housing markets of eight cities -- Delhi-NCR, Mumbai, <keyword id="6354925" type="COMPANY" weightage="100" keywordseo="Kolkata">Kolkata</keyword>, Chennai, <keyword id="6354321" type="CITY" weightage="100" keywordseo="Bengaluru">Bengaluru</keyword>, Hyderabad, Pune and Ahmedabad also observed that sales fell by 44 percent in these eight cities, which is not only the lowest level since 2010, but also resulted in a revenue loss of Rs 22,600 crores to the builders. 
 
Moreover, the report also stated that new home launches fell by 61 percent to 24,316 units in the fourth quarter compared with the year-ago period. 
 
As it turns out, housing sales had gone up in the first nine months of 2016, but 'the government's decision to scrap the Rs 500 and Rs 1,000 notes in early November pulled down the housing sales in the fourth quarter as well as for the entire last year.' This had a domino effect as it led to developers refraining from announcing any new launches and buyers were extremely cautious before buying anything. 
 This resulted in the launches and sales of <keyword id="6543013" type="UNKNOWN" weightage="100" keywordseo="real-estate-sector">real estate sector</keyword> in 2016 being the lowest since global financial crisis. 
 
Additionally, the report also estimated that Demonetisation had contributed to the state government's notional loss on stamp duty at Rs 1,200 crore. 
 To summarise, the <keyword id="6599769" type="UNKNOWN" weightage="100" keywordseo="Budget-2017">Budget 2017</keyword> is going to assume an even bigger importance when it comes to correcting the wrongs done to the real estate sector.

How Demonetisation crippled India's real estate sector and the difficult job in front of Budget 2017

Post <keyword id="3315394" type="UNKNOWN" weightage="20" keywordseo="demonetisation">demonetisation</keyword>, <keyword id="6354751" type="COMPANY" weightage="20" keywordseo="Income-Tax">Income Tax</keyword> department (I-T) has been really busy and stepped up its drive against those converting "black money" into "white". It has issued over 5,000 notices and detected undisclosed income of close to Rs 4,200 crore since November 08. 
 
After November 8th, about 1,000 surveys and search and seizure operations were conducted across the country. 
 
Between December 22 and 28, over 200 such operations were undertaken, data available with the department showed. 
 
While surveys involve scrutiny of books, cash and other assets, search and seizure are referred to as raids in common parlance. 
 
Rs 105 crore out of Rs 458 crore cash seizures, is a tad under a quarter, was in new currency notes of Rs 500 and Rs 2,000, indicating the widespread use of banking and cash mules to convert old currency into new ones, which is stored as cash in offices and homes. 
 The move mounted through field offices is meant to identify those who used various tools - from depositing in banks to buying gold and jewellery soon after PM <keyword id="6354477" type="PERSON" weightage="20" keywordseo="Narendra-Modi">Narendra Modi</keyword> announced demonetisation on November 8 - to try and protect their unaccounted wealth which was stashed away in the form of cash. 
 
Cash holdings are only a part of the black money with purchase of benami property and investments in gold and real estate being other tools. 
 
The tax department has deployed a multi-pronged approach, which involves detailed splicing of data received from banks and other sources and then sharing the numbers with the field offices.

I-T department issued over 5,000 notices, recovered Rs 4,200 crore cash since demonetisation

There has been a spate of discussions over how <keyword id="3315394" type="UNKNOWN" weightage="20" keywordseo="demonetisation">demonetisation</keyword> is likely to impact the <keyword id="6354553" type="COMPANY" weightage="20" keywordseo="real-estate">real estate</keyword> sector in 2017. Some say prices could tumble as much as 30%, while alternative opinion from the builder community has opined prices will remain steady and demand will go up. 
 The Hiranandanis engaged in the real estate sector, however, feel it will be an extremely favorable year for <keyword id="6371902" type="UNKNOWN" weightage="20" keywordseo="home-buyers">home buyers</keyword> on back of strong reforms implemented in 2016. 
 According to <keyword id="1294081" type="PERSON" weightage="20" keywordseo="Surendra-Hiranandani">Surendra Hiranandani</keyword>, Chairman and Managing Director of <keyword id="3018793" type="UNKNOWN" weightage="20" keywordseo="House-of-Hiranandani">House of Hiranandani</keyword>, buyers should exploit the first quarter of 2017 to cash in on some excellent deals in the real estate sector. 
 
He explains why – “To begin with, borrowing rates are expected to taper off in 2017 given the huge influx of money in the banks post demonetisation. This can set off a cycle, wherein lower rates of interest will direct borrowers to avail more loans at attractive interest rates. In future, owing to low returns it will not be feasible to park one's savings in bonds or fixed deposits, so consumers will prefer to buy property in the future.” 
 
Notably, a simple back of the hand calculation shows that a 1% reduction in home loan rates will lead to almost 7.5% savings in EMI, thereby putting more money in the hands of the consumers. 
 
The official economy will see a positive growth in the following months, elevating the purchasing power of the consumer, encouraging the consumers to invest more. But there is a reason why Surendra is stressing on buyers acting swiftly - “Home buyers can get excellent deals in the market as the industry has just begun to adjust to the new rules. This holds true especially for the first quarter of the year as most developers will look to sell existing inventory, so consumers must make the most of this opportunity and purchase property at attractive prices. New launches, however, will get impacted early on so the demand for available inventory and ready to move in homes will increase." 
 
He adds - "The rise in demand will ensure that prices remain firm and start the ascent once again. So, it will only benefit those buyers who act swiftly and purchase the property in the interim period." 
 
Developers will stand to gain too 
 
While the first three months may test the waters for the real estate sector, as the year progresses the tide will turn in favor of the developers as well. There will be a spurt in demand as buyers will return to the market owing to attractive rates and good deals. 
 
Surendra says - "The coming year will also see the demand shift from secondary market to primary construction owing to erosion of cash-linked sales. This will lead to better inventory utilization and ensure launch of new projects in the second half of the year. We can also expect significant foreign investments in the sector and increased participation from financial institutions, owing to better transparency and credibility post the policy changes initiated last year." 
 
Also, Demonetization will not affect the established players as transactions take place only through the legal route. The commercial real estate sector will also not be hurt as they cater to office/industrial leasing where all transactions are done through banking channels. 
 
The demographics of our country, Surendra says, ensure that the real estate sector needs to grow to meet the demands of an ever growing economy. India is currently growing at 6% per annum, but could reach double digits by 2019 if deregulation is in place. 
 
He concludes - "The future of India and the future of real estate are intertwined with each other..."

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