There is no desperation to either buy or sell. A sort of waiting game is being played in the real estate sector due to demonetisation, says Srinivas Acharya , Managing Director, Sundaram BNP Paribas Home Finance. Excerpts of an interview:
How is the real estate market playing out in the wake of demonetisation?
Currently, not too many deals are happening. The general perception is that there will be a significant price drop in the real estate space. People’s expectation of a price drop has heightened so much that they are waiting for the (prices to) drop. But I don’t see the likelihood of a 20–25 per cent drop in prices unless the seller is desperate for immediate money. I haven’t seen that kind of desperation in the sellers at the moment. The owners, too, are playing a waiting game.
What will be the long-term impact of demonetisation?
This is expected to be positive for real estate sector as only the well-organised would survive. The role of black money will come down drastically as more and more organised builders play a larger role.
What are the prospects of a demand pick-up in the real estate sector?
The demand has to pick up again. It could happen this year itself, if the government allows unlimited withdrawal of money deposited post-demonetisation. Release of locked up money could be a driver for recovery in the real estate sector. We remain cautiously positive as the government has to deal with the availability of land and development of city/town infrastructure to connect affordable housing colonies to the places of employment.
Do you think that home loan rates would head further down?
The recent rate-reduction announcements have come outside RBI action. They have come about due to surplus liquidity arising out of demonetisation. We have a very cautious outlook as withdrawal of cash deposited into banks post-demonetisation could leave very little leeway for banks to cut rates further and we could see rates moving up.
