After May 1, when the Real Estate Regulatory Authority (RERA) is in place, the realty sector will likely see an uptrend with slight price correction, say industry players and stakeholders.
This is likely as genuine buyers may pitch in on the back of an improved consumer climate and lower home loan rates.
"Considering the present scenario, the next three-four months are like the gestation period for the realty sector and after six months the sector is likely to gain momentum. We are hoping to see positive impact in the second half of 2017 itself after RERA comes into full effect," real estate advisory firm PropUrban Founder and Chief Executive Officer (CEO) Mir Jaffer Ali told IANS.
According to the Real Estate (Regulation and Development) Act, 2016, which came into effect on May 1 last year, every state is supposed to have a RERA in a year's time.
It will thereon become mandatory for all real estate projects, commercial and residential, to register with RERA for transparent execution.
"At a time when the setting up of a Real Estate Regulatory Authority in each state is set to bring in increased accountability in the markets, we can expect to witness some amount of correction in real estate prices in markets," property consultant Cushman & Wakefield Managing Director (India) Anshul Jain told IANS.
Ali concurred and said that the cash component in property transactions will see a significant drop, resulting in a fall in land prices, which could be anywhere between 15 and 20 per cent at some places.
On a positive note, almost all banks have also lowered the home loan interest rates post demonetisation which would automatically generate more demand for housing with the sops given to affordable housing in this year's Union Budget being an added advantage.
The start of 2017 has seen buyer sentiment improve and the anticipation is that with a positive electoral result and encouraging budgetary reforms, the sector should perform better over the course of the year.
Large developers such as the Lodha Group have seen sales of 850 units in February 2017, which indicates a gradual upward trend in consumer sentiment across the segment.
More so, with the dust of demonetisation finally settling, buyers' sentiments are looking positive in anticipation of higher transparency and efficiency. Genuine requirement for homes coupled with reduced interest on home loans can be attributed to this.
According to a survey by PropUrban, once RERA is fully in place, about 45 per cent respondents would be investing within the next six months, while another 26 per cent are likely to take the plunge within a year.
"Interestingly, now the market will see the return of 'real buyers'. As for the RERA and Benami Amendment Act, the sector is likely to see positive impact in the short-term — within one-two years," Ali said.
Moreover, with the deadline of implementing RERA fast approaching, developers are trying to focus on completing their existing projects rather than launching new ones, which is good for the sector and buyers, he added.
With RERA, there would be mandatory disclosure of project details, including those of the promoter, project, land status and clearances. This would increase the credibility of developers and would protect consumer rights as well.
Dharmesh Jain, President, Confederation of Real Estate Developers' Associations of India — Maharashtra Chamber of Housing Industry (CREDAI-MCHI), told IANS that RERA "will help in bringing in higher transparency and will help the customer to get possession in time. Also, one will know what they are paying for and would be sure they will get what they are promised. In fact, the developers will have to be accountable on the dates and timelines shared".
Additionally, buyers and developers will now finally be on a level playing field with respect to penalties on delays. Both parties will now pay the same rate of interest in case the buyer delays payment or the developer delays giving possession.
"RERA is a long-term policy measure whose effect will be pretty permanent, in the sense that it will drive unscrupulous or unorganised developers off the market and leave a level playing field for credible players in its wake," Ramesh Nair, CEO and Country Head of leading property consultant JLL India, told IANS.
"We are now seeing evidence of a gradual revival on the back of pro-consumer measures like RERA coming in, decisive court actions against errant developers, price corrections and renewed confidence in the economy," he said.
Shubika Bilkha, Business Head, Real Estate Management Institute (REMI), told IANS, "These initiatives will contribute to organising this sector that has been traditionally fragmented and unorganised, while improving consumer confidence."