Purchase of property is one of the most common sights during the festive season each year. It is observed that almost 30-35 percent of the annual real estate sales happen during this time of the year and most of the property buyers wait and gear up to buy only during the festive season in India.
Read Rakesh Reddy’s interview published with the property house magazine.
How will real estate sector react in this festive season as the GST and RERA is on the process?
We have not seen any dip in sales post the implementation of GST and RERA. Buyers have largely taken these two reforms in their stride and if anything their sentiment is up and there is buoyancy in the market. We do expect an uptick in sales during the festival season from October to mid-January as a lot of people prefer buying a new home around this time. Not only are there several auspicious dates available during this period but also after a long time there has been a moderate relief in the interest rate.
At the same time, we also observe that the buying pattern is quickly changing as more and more young buyers are becoming interested in real estate and they make informed decisions rather than focusing on freebies offered or the auspiciousness of a day.
There is a delay in implementation of RERA in some states. What impact do you think this will have on the real estate market?
Since RERA mandates that new projects cannot be launched without registration, the immediate fallout of its delayed implementation will be a cut in new launches in those states where the Act has been notified but the implementation is delayed. This will be a net positive for the ongoing projects as the availability will come down and buyers will have to choose from the available ongoing projects. On the flip side developers, market plans will go for a toss due to the delay in new launches. I believe a quick and effective RERA will be go a long way in bringing back orderliness and discipline into the real estate market and consequently increase the buyer’s confidence.
Why a slightly higher GST rate might be acceptable to buyers?
Under GST, the rates may only increase in projects where the land rates are very high and is a large component in the overall project cost. This is because there is no credit on GST for land purchase/development. For the projects where land is not a major component the rates may remain neutral or go down marginally. That said GST will bring a lot more uniformity, clarity and transparency for the buyer making his home buying experience a lot easier.