Tag Archives: interest rates

Impact of Demonetization on Real Estate

demonetization impact on real esatateStripping of currencies legal status is what is termed as Demonetization. It has been the long debated government policy now and has little or more impact  on almost every citizens of our country. Effect of demonetization on real estate has been very  much controversial with loads of romours and own speculations. But, lets have a look at the facts and statistics about its impact or reality market.

Most of the people thinks that it will help eradicate black money and will bring the much needed transparency which will build confidence and have the long lasting stability in the realty market. Our Hon’ble Prime Minister Narendra Modi has said that that over 5 lakh crore deposited with banks are not going to be kept idle and Banks will have to extend loans for all sorts of economic enterprises – for which they will have to bring down their interest rates, which seems to be a good sign for realtors. With falling interest rates property market will become more attractive.

Also since all the well organized companies choose to do their transactions through legal channels and financial means using bank loans and emi it will have a very positive impact on them. For those who used to do their transaction in cash will be forced to choose cheques and other legal payment modes which will eventually generate more confidence in buyers and more and more people will start investing without much of worries.

In short Demonetization is another big step along with Real Estate Bill and other government policy towards greater transparency  and better customer confidence. The sector is  also expected to receive more attention from foreign institutional investors given the improved transparency and better systems being in place.

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Possible rate cuts by banks

Imminent rate cuts by banks looks a real possibility now that Governor Rajan has made it clear that the cost of funds for banks have fallen substantially.

As usual banks have been rather reluctant to pass on the rate cuts to the end consumer in spite of couple of rate cuts by the RBI this calendar year. However, it is just a matter of time before banks are forced to pass on the rate cuts. Thousands of borrowers are patiently waiting for reduction in their monthly EMIs. Even corporate India has been very vocal on the impending rate cuts by the banks. On the ground economic activity will get a leg up when the borrowing costs comes down. Improved economic activity will result in higher income and will eventually boost the disposable income of the people.

Real Estate space should be one of the biggest beneficiary as and when the rate cut trickles down the system.
Now that the Governor himself has made his stand loud and clear, banks will have no option but fall in line by cutting lending rates, sooner rather than later.

Reference – Newspaper Link

 

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