Black Money in Housing is Down Post Demonetization

Real estate developers express their views on demonetization impact on realty transactions. In the pre-demonetisation period (2013-Q3 2016), approx. 16.15 lakh housing units were launched across the top 7 cities while sales stood at approx. 11.78 lakh units. Post demonetisation, Q4 2016-Q3 2021, sales of about 10.37 lakh units outstripped new launches of 9.04 lakh units. Overall, new launches between two periods reduced by over 44%. Pritam Chivukula, Hon. Secretary, CREDAI MCHI said, "An important goal of demonetization was to reduce the use of cash in transactions and inspire people to pay using non-cash modes. This has brought a large number of evaders in the tax net. It has indirectly made things more systematic, accountable and transparent. Overall, the move has declined cash transactions, increased the bank deposits and financial savings has seen an uptick too." According to the study, the secondary sales or resale housing market proved far more vulnerable to demonetisation than the primary market. This segment, along with luxury housing, historically drew the bulk of 'cash components'. While the resale housing sector continues to reel from the aftereffects of DeMo, affordable and mid-segment housing demand in primary sales (sales by developers) increase. Vedanshu Kedia, Director, Prescon Group said, "All the three major objectives of curbing black money, fake notes and most importantly creating a cashless economy have been achieved as India has become one of the largest markets for digital payments. After demonetization, a large share of the population has gone digital and have adopted cashless transactions. There are many proptech start-up’s now that are working on creating platforms that allow homebuyers to experience property and make a block on their inventory by committing an expression of interest. This will definitely enable ease of doing business and bring liquidity to the real estate market." One major driving factor behind demonetization is that branded, listed players who now attract a significant majority of housing demand to their projects play by the book and avoid unaccounted monies in their transactions. After DeMo and the roll-out of RERA and GST, homebuyer demand gravitates towards branded products. Leading developers shifted their previous focus on luxury projects to the new demand for affordable and mid-segment housing. Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory said, "It has helped the sector to consolidate the market, it brought a level playing field for the organised and transparent entities. It has prevented the inflow of black money and nearly wiped-out the unorganised players. More importantly, it has paved the path for corporate and listed companies to expand and grow, which in other cases was tilted in favour of local and unorganised players."