NEW DELHI: Housing sales in secondary property markets have revived, rising by 10-12 per cent over last one year, due to fall in prices and no GST on completed units, according to real estate consultant Anarock.
The consultant said that demand for ready-to-move-in homes are on the rise as buyers are shying away from investing in under-construction projects, especially in NCR, due to significant delays in execution by a number of developers. The housing sales, which fell initially post demonetization in November 2016, have now revived, Anarock Vice Chairman Santhosh Kumar said. He noted that there has been “10-12 per cent increase in the number of buyers in the secondary real estate since DeMo”.
“Property values in secondary (resale) market reduced by as much as 5-10 per cent over primary market (flats offered by developers),” he added. Kumar said the Central government has put in tremendous efforts towards creating a healthier and regulated real estate environment. “Implementation of policies like DeMo, RERA, GST, REITs, the Benami Transactions (Prohibition) Amendment Act, 2016 and the Pradhan Mantri Awaas Yojana (PMAY), among others, have brought fresh hope,” he said.
Indian real estate market is witnessing a new trend of increased demand for ready-to-move-in properties, he said. Kumar said there are various factors for this trend, including the chronic delays in project execution by the developers. “Ready homes decrease the combined pressure of monthly EMIs and rental outgo for the common man. Also, ready-to-move properties do not attract GST,” Kumar observed.
On the impact of note ban on the secondary property market, Kumar said demonetization initially resulted in reduced sales, with most investors seeking to exit. However, he said sales have now revived due to fall in prices.
“Almost 20 months after the almost complete standstill triggered by DeMo, its negative effects on the resale market have tapered considerably,” he said. The cash transactions, which formed almost 30-50 per cent of the total payments earlier, have been seriously curtailed, Kumar said.
Demonetization has created actual fear among buyers who might have thought of cash deals previously. “Contrary to all doom-and-gloom predictions, DeMo has had a very positive effect on the secondary sales market. Moreover, even RERA has had helped this segment, albeit more indirectly,” Kumar said.
According to Anarock, the Goods and Services Tax (GST) implemented in July 2017 only applies to under-construction properties while ready-to-move-in homes and land are exempt. This considerably reduced the demand for under-construction properties by buyers, and increased demand for ready-to-move properties – in both the primary and the secondary sales markets, it said in a report.
In the current scenario, buyers are at a major advantage in the secondary market – firstly because they can see the product and its quality first-hand, and secondly because they get better pricing option, it added. PTI
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