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Showing posts from November, 2016

Demonetisation - Get Ready for Property Price Hike

There are lot of whatsapp messages and news paper articles doing the rounds that the demonetisation of old currency will result in a crash in property prices. Such messages and news even though they offer a feel-good factor to common readers are far from truth. 

FEAR IS NOT NEW
In mid-2015, reports predicted a 50% crash in real estate prices. The logic used, was that the rental yield on real estate is very low as compared to the interest rates on bonds. Nothing akin to the prediction happened. However, the report did create a sensation. 




WHY DID THE FEAR FAIL
When the sentiments were against investment in real estate and hence, prices should have down. But, there were also inertial forces that worked against the reduction. Central government, state government, Banks and municipal corporations had indirectly helped stopping the price fall to avoid their revenue loss.

Latest argument for Price Fall:
The Indian real estate market has been thriving on black money and controlling the black money…