Impact of Demonetization on Real Estate and Housing Sector - Home Loan Blog - Tata Capital

Impact of Demonetization on Real Estate

Mar 08, 2017

We all know that real estate sees a lot of cash transactions and in the wake of demonetization, there are several questions running through many minds regarding sale of property such as how demonetization is going to impact real estate? Whether or not, they should buy property or apply for a home loan in such times?

Here's an idea.

To understand the impact, you have to first see real estate market as two different segments: newly constructed property and resale and land property. Demonetization is likely to have the least impact on the newly constructed property market and affect the resale property and land property markets more. Important thing to consider here is that there will be less real estate transactions up to next six months. But the opportunity for real estate investors lies in all three sectors.

Newly constructed property market

Builders will be facing cash shortage because of a sudden drop in sales. Since there is a negative sentiment about the impact of demonetization in real estate market, the segment will see a lower demand in new properties. And to draw in more buyers, they are much likely to throw in attractive offers, freebies and many other benefits in favor of the buyer. While there will not be high drops in prices, builders are definitely going to negotiate with serious buyers eligible for home loans. This will get buyers considerable value for their money and it's the perfect opportunity for you to save big on your house purchase as you have the upper hand in bargaining with the builder.

Resale property and land property market

Given that the cash payment pays a huge role in resale property and land property market, this segment will face a direct impact of demonetization. In the aftermath of demonetization, most people are short on money as the big move has sucked out unaccounted cash from the system. But this also brings good news for buyers with home loan eligibility. Since the affluent buyers with unaccounted cash are no longer in the game, there will be a less demand, pressurizing sellers to cut down the cost.

So, if you are planning to buy a house, now is the best time to find a property at a great deal and reap the rewards in the long term. You can easily apply for a home loan online without having to go to the lender.