VIJAYAWADA: Credai State president A Siva Reddy has said that the realtor’s body is expecting a raise of 20 percent in the real estate prices this year as in the post-demonetisation scenario, builders are going slow on new launches.
The introduction of new regulatory bill and high input cost may also act as the reasons. Speaking to Express here on Tuesday, Siva Reddy said that the real estate sector across the State will witness a major change in 2017 with the introduction of RERA (Regulation and Development) bill in May 2017 and implementation of Goods and Service Tax (GST) in April 2017. In view of the several requirements of the RERA Act, the real estate developers will be constrained to take up smaller and limited number of real estate projects.
In view of this change, the supply of real estate products will come down, while the demand continues to increase in Amaravati capital region.
The gap between demand and supply will increase. Consequently, the availability of housing units will also be less. Therefore, the prices of housing units will increase, once the RERA comes into effect from May 2017, he said. Further, with the introduction of GST, the rate service tax will go up by 18 per cent, compared to 5.5 per cent, which is now applicable.
Thus, the real estate prices will increase as a consequence of introduction of GST from April 2017. Almost 80 per cent of the Vijayawada market consists of mid-segment housing, whose pricing ranges from Rs 15 lakh to Rs 75 lakh. The buyers in this segment are mostly employees, whose income ranges from Rs 25,000 to Rs 2 lakh.
They essentially pay the housing instalments from their savings or bank loans. Therefore, there is hardly any cash component. The demonetisation has no effect on prices of residential housing or other housing, he said.
Siva Reddy also said that demonetisation of high—value currency notes is bringing in huge deposits to banks, therefore giving them more maneuverability in giving loans. It will also provide a chance to the realty industry to offload its inventory. The primary sale of the houses will go up post-demonetisation as the banks will lend more money to actual buyers, he said.