HYDERABAD: The cascading effect of demonetisation would impact the real estate sector in the city with property prices not easing in the coming months.
If experts from the field are to be believed, the prices are set to soar with the roll out of Goods and Service Tax (GST) and Real Estate Regulatory Authority (RERA) in 2017.
However, the property prices will not see any significant change for the time being, says Confederation of Real Estate Developers Association of India (CREDAI). The city has low inventory of property than other metros in the country that are yet to be sold. Most of the big projects in the city are still under construction.
“If the property prices go down any further in Hyderabad, we can’t afford to do business,” said P Ramakrishna Rao, general secretary, CREDAI. The sector is in “a revival mode” and RERA is expected to bring confidence among buyers. With demonetisation, more money is being deposited with the banks and this is expected to bring out EMI for the buyer, he added.
With roll out of GST and RERA in 2017, the price of real estate is expected to go up. For property buyer, it’s not good news.
Both Telangana and AP has low VAT taxes. GST is expected to be set at 18 per cent but a 7 per cent property value for stamp duty, a two per cent property value for transfer fee and 0.5 per cent as registration fee could result in the buyer paying close to 27.5 per cent in taxes, say experts.
“The real estate buyers in Hyderabad are mostly salaried employees who form 95 per cent of the mid-segment housing,” said S Ram Reddy, president, CREDAI. The pricing most preferred by this group range between `25 lakh to `1 crore, he added.
The funding by home buyers are mainly through bank loans. The organised real estate sector in the city had moved to cashless transactions a few years back. The industry is funded mainly through banks and financial institutions.