The Perpetual Rising of Property Prices in India: An SEO Optimized Analysis
It is a common belief among Indian developers and property enthusiasts that the prices of apartments in India will only rise, fostering a steady increase in the real estate market. However, the sudden slow-down and a possible downturn in the market raise questions. Des) aring this phenomenon, this article will explore the reasons behind the persistent rise of property prices in India and how various factors contribute to this trend.
Economic Factors Post-2016 Demonetization
One of the most significant changes in the real estate market post-2016 Demonetization is the absence of 'black money.' Before Demonetization, over 50% of real estate purchases were in cash involving 'black money.' This cash was then reinvested in more properties, creating a continuous cycle of demand and supply.
However, with the demonetization, a substantial portion of this black money ceased to exist, disrupting the cycle and leading to a stagnation in property prices. Additionally, the increase in property prices after Demonetization meant that owners would sell their properties for cash and then reinvest in new ones.
No Guarantee of Price Increase
After 2016, the real estate market faces a significant challenge due to a lack of guaranteed price increases. With the absence of black money, the market is devoid of speculative buyers who see the potential for price increases. Currently, the real estate market is driven by genuine buyers who require the properties for living purposes, not for speculation.
These buyers often lack the substantial capital necessary to meet the current high sale prices of properties. Consequently, they are unable to match the sale price, leading to fewer sales and a slowdown in the entire market.
New Challenges with GST and Anti-Black Money Measures
Moving forward, the real estate market faces additional hurdles due to the implementation of Goods and Services Tax (GST) and stricter financial regulations. The GST has introduced a more transparent and regulated sales process, which has made it difficult for real estate sellers to avoid paying taxes or accepting large sums of cash.
Furthermore, the Benami Transactions Prohibition Act, 2016, has strict provisions against the use and transfer of assets through unreported or anonymous entities. This Act ensures that property transactions are transparent and discourage any form of black money.
These new measures mean that sellers cannot accept cash payments without legal risks, and buyers are more cautious with their investments. Consequently, the market is witnessing a delay in property transactions, leading to a potential price reduction.
Market Corrections and Future Outlook
The current challenges in the real estate market have led to a severe shift in market behavior. The buyers are less willing to pay premium prices, and sellers find it difficult to offload their properties at the prevailing rates. This situation is driving a heavy price reduction, which is set to correct the market.
Moreover, the combination of decreased demand and no significant influx of new buyers is leading to a significant correction in the way properties are bought and sold. The traditional cycles of buying and selling are being reassessed.
Looking ahead, the near-future holds a promise of a substantially lower property valuation as the market adjusts to the new realities. The absence of black money and stringent financial regulations are driving a paradigm shift in the way real estate transactions are conducted in India.
Ultimately, it is the market forces that will drive property prices down to realistic levels. The demographic, economic, and financial changes post-Demonetization and the implementation of GST and Benami Act are key factors that will contribute to this trend and reshape the real estate market in India.