The Delhi government on Friday cut circle rates by 20 per cent, a move that will bring down the exorbitant property prices in the capital city.
The new order includes all types of properties across the city. According to sources, it is aimed at boosting property transaction in the market that has been subdued for the past few years. “Moreover, its timing is crucial, given the fact that the elections for the Municipal Corporation of Delhi is due next year and it is currently being governed by the Bharatiya Janata Party,” said a senior industry leader and political activist.
Real estate developers and industry stakeholders welcomed the Aam Aadmi Party-led government’s move. They said the reduced circle rates would translate into lower valuation of real estates and help interested buyers, who were otherwise left out due to the high property prices in the capital.
“The decision comes at the right time when the industry is recovering from the impact of Covid-19 pandemic. The reduction in circle rates will make properties more affordable and should increase the number of transactions. It may also lead other states to take a similar step in near future as a booster to the real estate sector,” said Achal Raina, chief operating officer, Raheja Developers.
According to Akshay Taneja, managing director (MD) of TDI Infratech, the sector is facing problems in containing the prices of units because of increasing raw material cost. “In this scenario, lower circle rates would be beneficial. The secondary market will go in for more registries as stamp duty and registration charges will come down,” he said.
“We have already seen positive impact of reduction of stamp duty in Mumbai and this will help in faster recovery of the local real estate market,” said Ankit Kansal, founder and MD, 360 Realtors.
Apart from the primary market, the move has a far fetching impact for the secondary market, said experts. With a large number of restrictions against developing new residential projects, including high-rise apartments, the market in Delhi is highly dependent on secondary purchases. Over 90 per cent of the transactions take place in the resell market.
“A series of hikes in circle rates since late-2000s have pushed the rates beyond purchasing power of most buyers. Now with a steep cut, people willing to buy pre-owned properties will surely benefit,” said senior executive from a leading realtor.