Why Property Sellers Must Not Lose Their Sleep Over Demonetisation

Prime Minister Narendra Modi's sudden announcement late on November 8 that currency notes of Rs 500 and Rs 1,000 would turn in to “worthless pieces of paper” hours after took the country by surprise. This demonetisation drive was going to impact the life of every countryman in some or the other way. But, for some the impact of the announcement was going to be devastating, experts predicted. These included those operating in the real estate sector. A move aimed at curbing the use of unaccounted money — popularly known as black money — into the system, the demonetisation of higher currency denominations was going to dash all hopes of the home sellers who were expecting to secure good returns on their investment by selling properties this festive season. As the process to deposit demonetised notes continued (last date December 30) , media reports kept adding to the jitters of these sellers, predicting a great fall in property prices. 

Watch: Demonetisation Boosts Property Tax Collection Across Country

All that considered, here are certain things that indicate there is no reason for sellers to lose hope:

The times are “a-changing” and you will have to sit back and wait. Nobody is going to expect you to sell a house that you bought for Rs 40 lakh five years back at Rs 35 lakh now. Cutting down prices is even more unviable for those who have taken loans to fund their home purchase. But, on the other hand, having undue expectations is not good either. Unlike the good old times, prices are not going to double. “I bought a property five years ago for Rs 35 lakh, and another couple of lakhs were spent in carrying out other formalities. I was hoping to sell this 1BHK apartment for Rs 40 this year and shift to a bigger house. But they tell me, I will have to cut prices substantially to sell it. How can you expect me to do so? Even if I have to wait for a long time, I am not going to sell my house for less than what I invested in it,” says Deepak Dinkar, an information technology professional who owns a house in Delhi's Laxmi Nagar. All other sellers would agree to what Dinkar is suggesting here.

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Let's not forget this one fundamental fact — home buying is never going to be out of fashion. We do not mean to lessen the financial implications of the home-buying decision, especially in major Indian cities. But, for most of us, it is more of an emotional decision. The doom that they have predicted about the home buying and selling business is ill-founded at its very basics. The sector will be purged, while money transactions will flow, and buyers will soon come back to the market.

A genuine seller has nothing to fear, no matter what. Assuming that all the sellers have been expecting windfall by securing money through wrong channels is another perception that needs to change if India's real estate sector has to redefine itself. The demonetisation move is an opportunity for those who were not here using the sector as a money-making tool.