Coming at a time when property sales have been experiencing a slowdown, the ban of Rs 500 and Rs 1,000 notes could further bring down home prices by 20-25 per cent, say realty consultants and investors Business Standard spoke to.
“There will be liquidity crunch in property markets because so much cash is going to go out of the system. Till stability comes back, the problem is going to be there,” said Gulam Zia, executive director, Knight Frank, a global property consultant. Zia says while the national capital region (NCR) market could correct by 20 per cent, in Mumbai it would be 15 per cent and southern markets could see a 10 per cent correction in prices.
Zia says both primary and secondary markets will be impacted and the pain in NCR, where cash component is high, will spread to other markets.
“There will be a domino effect. It is foolhardy to believe that primary markets are devoid of cash component. Developers need to pay cash in many places . If they pay in cash, they’ll receive in cash,” he says. Twenty-five to 33 per cent of the real estatemarket is believed to be cash market. Home sales fell 22 per cent in eight major cities to 33,304 units during the September quarter due to muted end-user demand, according to a report by PropEquity Research. “Housing demand across key cities declined by 22 per cent largely on account of muted end-users demand even when developers continue to offer heavy discounts and benefits,” PropEquity added. New launches also fell by 22 per cent at 22,745 units, from the previous quarter, while unsold stocks declined by three per cent.
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