Rs.500 And Rs.1000 Notes Ban Impact The Real Estate Sector

The late night news on 8th November 2016 (8/11/16) by the Modi Government has left everybody awestruck. Though the news about the release of Rs.2000 note and the hidden strategy about the design is revealed much earlier through various channels, the ban on the Rs.500 and Rs.1000 note is a brave step by the Modi Government, to eradicate black money.

The ban on the Rs.500 and Rs.1000 notes decide whether the economy will go towards deflation or inflation. If India is really driven by white money, it is inflation, else, deflation. If, illegally earned, then the amount cannot be declared and the circulation of money reduces which causes deflation.

Impact on Real Estate Sector.

The economy is going cashless. This is a great advantage for organised builders who are already using banking as their channel. Many ongoing projects involve into triparty agreement which makes things clear w.r.t. bank, the builder and the investor.

rs-500-and-rs-1000-ban_loanyantra-comIt is the unorganized builders and the secondary market that gets affected. As the small builders depend on the cash transactions while buying the raw material from the wholesale markets. The resale property market also relies on 15 to 50% cash transactions. So, this will be a big challenging move to the small builders and the resale property market.

Rs. 500 and Rs.1000 Ban Impact on Real Estate Sector’s Price Change

Rs. 500 and Rs.1000 Ban Impact on Real Estate Sector’s price might remain constant w.r.t organized builders. They can’t hike the prices as already the real estate is going on a down trend. Also, since the movement of cash is literally low, the price hike will not help the situation in any cause.

But are there chances for a decrease of price? 

The investment capability of the buyers will surely reduce. It also varies according to the place and the nature of the investors. The investors in a place like Bangalore amount upto 80% of the IT employees and 20% of the self-employed people. So, the ban on the Rs.500 and Rs.1000 notes doesn’t really impact them. They remain purely unaffected and the investor capability too remains unaffected. But in a place like Mumbai where the investors vary from small businessmen to IT employees, the impact is strong. As the business people in Mumbai and also in many non metropolitan cities are more, the investing capability will reduce with the ban on the Rs.500 and Rs.1000 note.


So, in such a situation, to attract the investors, and to capture the market, the real estate sector will initially reduce the prices. So, it is sure that the prices go up only after the economy attains stability and there is an organic demand for the real estate.

Tip : So people to invest in organized sectors, please go ahead with your decision and fulfill your dream home desire.

Also there are attractive interest rates coming up with the banks. So you can plan well and pay lesser EMIs for a good amount of loan.


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