Demonetization; a positive impression on real estate ?>

Demonetization; a positive impression on real estate

“Over 5 lakh crore deposited with banks are not going to be kept idle. Banks will have to extend loans for all sorts of economic enterprise – for which they will have to bring down their interest rates.”

                                                                             – Hon’ble Prime Minister Shri Narendra Modi

What expert’s speak on demonetization?

“All prices will go down. The bank has seen huge inflow of deposits but demand for credit has slowed down.”

– Arundhati Bhattacharya, Chairperson, SBI.

“We expect banks to reduce deposit rates by 1.25% over the next six months.”

– Rana Kapoor, CEO & MD, Yes Bank.

“Demonetization good for growth. Impact on property market exaggerated. I don’t see any possibility of prices coming down much.”

More cash flow equals to lower interest rates of home loan
When banks get more cash flow the interest rate reduces in order to attract more and more for loan. A decreased interest rate of 1%- 1.5% is going to be witnessed in the coming year. This means that EMI will go down by almost 12% from Rs.856 (for 1 lakh @ 9.25% for a 25 year loan) to Rs.755 (for 1 lakh @ 7.75% for a 25 year loan), leading to much higher demand for real estate.

Real estate is going to see a major boom

Real estate is going to see a major boom as no one would like to keep their liquid cash at home or bank. Because, first of all it is not safe to carry cash with you at home. In such a scenario, it is wise to invest in such markets where investment is safe. Real estate is one of such safer options for investment purposes.

Primary real estate is the next big trend

Yes, many real estate giants have this to say. Secondary real estate market is going to go through a bad phase but primary market on the other hand is going to go through its best phase ever. Due shifted demand from secondary to primary real estate sector is going to flourish undoubtedly.



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