The year 2017 witnessed several major events that impacted the real estate sector – from policy-related announcements and reforms, to interest rate changes, tax related announcements and the attempt to shift to a cashless economy.
However, the moot question is: Whom did these reforms benefit more – was it the buyers or the developers?
Experts maintain that the first major impact on real estate, was the demonetisation drive, which was announced in November 2016, but the impact continued almost till April 2017. Then, it was the Benami Properties Act, followed by the Real Estate (Regulation and Development) Act (RERA) and the Goods and Services Tax (GST) and finally, the amendment made to the Bankruptcy and Insolvency Code. In between these policy announcements, the interest rates on home loans too came down, as banks reduced the lending rates from more than 8.5 per cent per annum in the starting of 2017, to close to 8.3 per cent per annum now.
Policies that affected the real estate sector in 2017
According to Niranjan Hiranandani, CMD of Hiranandani Communities and national president of NAREDCO, 2017 was a favourable, as well as challenging year for both, buyers and builders. “To begin with, demonetisation gave a push to digital payments. So, the cash component in real estate deals went down drastically. Then, the first half of the year saw transactions being put on hold, as stakeholders wanted to see the impact of the RERA. Once RERA was implemented, it was GST, which was next in line for implementation. Effectively, the ‘fence-sitters’ moved on to becoming ‘actual buyers’ only from the festive season. It followed almost half a year of very slow sales and the off-take has been slow to improve. At the end of 2017, real estate is moving back towards normalcy, albeit under the new regulatory regime,” Hiranandani adds.
2017: A year of temporary negative sentiments
Overall, the year 2017 witnessed negative sentiments temporarily, due to the policies introduced by the government, admits Ravi Ahuja, senior executive director, Mumbai and developer services, Colliers International India. “However, these policies will benefit the industry in the long-term. Also, fly-by-night developers will find it difficult to comply with such policies. It will bring the required transparency and ethics in the real estate industry and will be a win-win situation for buyers and developers,” Ahuja explains.
Experts maintain that consumer confidence will grow in the future. The RERA will enforce transparency and developers will be made accountable for their projects. Affordable housing will be the driver of real estate growth, given the initiatives and support from the government. “Housing finance is at record low interest levels. This will ensure that a home seeker will find it to his/ her advantage, to buy a home with a loan. So, 2017 can be summed up as ‘positive’, from a long-term perspective,” concludes Hiranandani.
|“2017 will be seen as a watershed year for the real estate industry, owing to the implementation of various policies. The negativity, if any, will only be temporary, It will only impact the developers who are non-compliant and over-leveraged, given the interim negative impact of stagnant sales.”– Ravi Ahuja, senior executive director, Mumbai and developer services, Colliers International India.|