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Will Property Price Fall or Rise With RERA Implementation?


RERA, the newly enforced ruling in the real estate sector shall play down on irregular and incoherent practices of developers that would hence prove to yield a transparent picture for new home buyers. Also certain incentives have been provided to the buyers who have already booked their properties but till date haven't got the occupancy for the same.

Will Property Price Fall or Rise With RERA Implementation?

So, will the new law impact price of the property in question is largely being thought of and experts are of the view that property prices shall be boosted upwards.

Here are a few factors for the same:

Market Forces of Demand and Supply: The transparency is set to be boosted with the enforcement of RERA and with it more trust and confidence in the developers from the end users. More so, affordable housing scheme shall be betted upon by middle and lower income groups together with better home loan rates who shall be taking advantage of Credit Linked Subsidy Scheme for housing.

Concurrently the supply side will have to gear to match increasing demand as now the developers will only earmark only the number which it shall be able to deliver in time as there is huge penalty provisions under RERA in case the developer defaults on timely delivery of the property.

However, the uptick In the sector is expected to be only marginal due to RERA.

Land cost is expected to rise: In the wake of demonetization, several individuals diverted their unscrupulous cash towards property purchase. But transparency norms as put forth under require developers to make such deals with legal cash and hence the property price for the end user is likely to rise as complying with the norms would mean higher input cost for developers.

Also, as now the developers can launch a particular only after all the necessary approvals are received by the authorities. Now, the cost of holding the property shall be passed on to the end-users or home buyers for the associated opportunity cost.


So, the sector is likely to see some positive on account of lower home loan rate, better commitment by developers and trust and confidence again gained by the sector end-users due to RERA.

Story first published: Tuesday, June 6, 2017, 14:57 [IST]
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