With the decline in the number of property transactions and postponement of the launch of new projects, a sense of uncertainty is prevailing in the real estate sector in Shivamogga city following the demonetisation of Rs. 1,000 and Rs. 500 currency.
According to the information provided by the office of the Sub-Registrar, an average of 90 property transactions take place in Shivamogga city every week. However, in the week that followed the announcement of demonetisation (from November 10 to 16), only 43 property transactions have been recorded. This decline in property transactions is around 52 per cent. The average revenue collection at the Sub-Registrar Office in the form of registration fee and stamp duty is around Rs. 97 lakh per week and this has come down to Rs. 43 lakh from November 10 to 16.
It is a known fact that the actual market price for which the property is sold is almost double the guidance price fixed by the office of the Sub-Registrar. In the sale deed and other documents, the guidance price is quoted for the property to avoid payment of statutory fee that includes registration fee and stamp duty. The amount towards the price of the property mentioned in the sale deed, the statutory fee, is paid in the form of cheque or demand draft, while the remaining amount is paid to the seller in cash.
Chandrakanth, a real estate agent said that owing to the ceiling imposed on the exchange of demonetised currency with new ones and on the withdrawal of cash from the accounts, the buyers are facing paucity of cash. Even those who sell the property are also hesitating to receive huge sum of money in the form of cash owing to the restrictions imposed on financial transactions after demonetisation. He said that common people will be benefited from demonetisation in the long run as the property owners cannot quote inflated price for the assets in future.
It is said that as the bank employees are busy with the operations related to demonetisation, the clearance of the applications to avail loan to purchase sites and housing loan is likely to be delayed. Moreover there is no clarity on the mode of property transactions in future. Owing to the sense of uncertainty prevailing in the real estate sector following demonetisation, property developers are postponing the launch of new projects.
A property developer on condition of anonymity told The Hindu that he has postponed the launch of his new residential layout project on Sagar Road. “The restrictions on financial transactions in banks, including the ceiling on cash withdrawal, will remain for a few more days. It is sure that the sites in new projects will not attract bookings and payment of advance amounts now. Launching property projects at this juncture will be a loss," he said.
