Could Rents Go Up After Demonetisation?

Could Rents Go Up After Demonetisation?

Could Rents Go Up After Demonetisation?
(Dreamstime)

With demonetisation around, the real estate sector has suffered a slight setback especially because it involves cash transactions and because of certain loopholes in this unorganised market, black money makes inroads into the system as well. Largely, this move has affected the resale market which is sober since the announcement on 8 November.  Many buyers are therefore backing out waiting for the right moment.

Also read:  Expecting Property Price To Fall After Demonetisation Move? You May Be Disappointed

Benami properties coming under scrutiny further muted the real estate market. Along with this, interest rates in grey market have seen a drop from 30 per cent to five per cent. All these factors are creating a market scenario wherein buyers are choosing renting over purchasing homes. 

Also read: After Black Money, Benami Transactions To Come Under Scrutiny

Buy vs Rent report by a financial consultancy called ArthaYantra Corporation says that the rental rates will see an increase over the coming 12 to 18 months. This is mainly because people want to hold on to their decision to make a purchase.

The main reason behind this is that buyers are gearing up for the changes coming up in residential market. With the upcoming Real Estate Regulation Act (RERA) and expectation of a transparent real estate sector, buyers are putting on hold their purchase decisions.  

There are different opinions floating in the market. As per Sreekrishnan Ganapathy, CEO, Sree Consultants and SreeGuru Realtors in Chennai the rental market rates are currently stable and there is no increase in the rental rates. And the rental rates might even fall in the coming time.    

Srishti Amar, sales manager at Golden Pillars in Lucknow shares the same opinion that rental rates in Lucknow are not increasing. Buyers are not booking flats but enquiries are coming up. They are waiting for RERA and other developments to take place.

However, we cannot discount that demonetisation may push the rental markets of expensive cities such as Mumbai.  Amidst different opinions floating in the market, it is sure that demonetisation is one of the main factors that is restricting buyers to make bookings. This might prove beneficial for the rental market in the short run.

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