What would be the effect of demonetisation of 500 & 1000 notes on Pune property rates?:
I feel pity for Pune builders.
In the last couple of years, the builders in Pune had lost respect & credibility.
Somehow, with the help of private housing finance companies these builders were managing to remain in business. They were tempting the buyers to book a flat by offering discounts & easy payment plans.
The naive flat buyers were reluctantly accepting these baits & booking flats only because they were still afraid of property price rise.
In spite of the huge inventory of unsold flats laying around, investors', bureaucrats' & politicians' black money was empowering the builders in Pune to hold on the property rates.
Instead of waiting for 50 % property price correction - it is safe to surrender and accept 15 % - 20 % discount and book a flat now - was the popular idea among these naive flat buyers.
But the demonetisation completely neutralized this fear factor. Flat buyers in Pune no more fear of property price rise. Flat buyers in Pune no more belive that of property rates will remain stagnant. Even naive flat buyers in Pune strongly believe that property rates in Pune are going to fall.
So, now, the builders in Pune have lost their most effective weapon - the fear.
But, there is no cash component in Pune - the difference in ready reckoner rate and selling property prices is not much - builders in Pune go for construction finance - if you consider the land price & construction cost, the property rates in Pune are quite reasonable and there is no scope for price reduction - some experts told me.
Booking a flat is a sentimental act - not a rational decision - dude! I told him.
But, financially price reduction is impossible - one expert said.
Financially? Whose money is this? This industry runs on the flat buyer's money - if you don't bend then they will break you - I told him.
I really feel pity for these dumb, disrespectful, unreliable, untrustworthy, powerless buggers.
In the last 15 days, since the demonetisation of 500 & 1000 notes on 8th November 2016, everybody asked me only one question - "What would be the effect of demonetisation of 500 & 1000 notes on Pune property rates?"
Eventually I realized that this was not the question. It was a firm belief. Not a wish. Not even a prediction. Everyone was very much sure that because of demonetisation property rates in Pune are going to go down.
Not only that! Everyone was ready to wait till the property rates really go down. Ready to wait to book a flat. Ready to postpone the registration of agreement to sale. Ready to renegotiate the price of the resale flat. Everyone was sure that there was no point in rushing. Better wait & watch.
What happens when the flat buyers do not book a flat?
Property rates go down. Right?
What say you?
Share your views in the comments, please.
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