Things are getting better for the real estate market, with recent developments

Lower interest rates, the establishment of the Real Estate Regulatory Authority and the government’s demonetisation move, are likely to make the property market more structured and consequently, the best time to invest, believes Rohit Raj Modi, VP North, CREDAI National.
While there has been a slump in the market across the country, this is the best time to buy, as sales have started to gather momentum again, says Rohit Raj Modi, VP North, CREDAI National, speaking to Housing News

Q: What is your view on the current market scenario?
A: The housing market has witnessed a downward trend for past two years. However, sales have picked up again, on account of a few positive developments. Interest rates have come down and inflation is under check. The Real Estate Regulatory Authority (RERA) is a reality in the making, which will make the market more structured.
The confidence among the buyers is back and this is reflected in the sales during September 2016, as compared to the corresponding period in the previous year. As per industry estimates, sales have increased by 11% and 28% in the National Capital Region and the Mumbai Metropolitan Region, respectively. In the next three to four quarters, sales should increase further, on account of improving market sentiments.

Q: What is the reaction among developers, over the enactment of the RERA? Are developers now trying to complete their projects, before states roll out the rules/regulations of the RERA?
A: The developer community has welcomed the implementation of RERA. It will bring more transparency and accountability in the market. Effectively, all states have been asked to implement the rules of RERA by May 1, 2017. There is no deliberate attempt to finish projects, in view of the RERA. Developers always focus on completing their projects, as soon as possible.

Q: While you suggest that sales velocity has picked up, unsold inventory remains a concern, especially in the NCR and MMR. What is your view?
A: The term inventory has often been incorrectly used in the media and the market. It refers to the ready stock of the inventory. However, in a project, the dilution of inventory may take at least four to five years. In the next three to four quarters, stocks will dry up, as things are getting better for the real estate market, with recent developments.

Q: How is the scenario different in a tier-2 town, as compared to a metro?
A: The situation in tier-2 towns and cities is better, when compared to the metros. Earlier, the supply of units far exceeded demand. Now, sales have picked up and the demand-supply gap has reduced in tier-2 cities, as well. This has made the situation better. Also, most of the people living these cities are self-employed, as compared to people living in the metros who pay home loans and are bound by appraisal cycles. Thus, the markets in tier-2 cities and towns are fairly stable.

Q: How will the recent demonetisation drive affect the realty market? Which segment will be impacted the most?
A: The move has a lot of positives for the industry at large:
It is primarily the resale market that will be affected by the move, as it has a large component of unaccounted cash or money in its transactions. Thus, the move will bring the resale market on a level playing field with the primary market, where you have under-construction properties.
Demonetisation will also help the government and the RBI, to recapitalise the banks and lower the fiscal deficit of the country. This in turn, will lower the lending rates, bring down the cost of mortgages and increase accessibility to funds.
This will also strengthen the hands of the government and enable it to announce various incentives in the coming fiscal, such as greater spending on infrastructure, low-cost housing, etc.
Q: What is your advice to buyers of residential properties?
A: This is the best time to invest in the real estate market. Those waiting for any miracle or rate correction, may miss the bus, as the time is now ripe, to reap the benefits of the various incentives offered by developers.

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