How will real estate prices be affected in India after banning of 500 and 1000 rupees notes?

The ban on Rs 500 and Rs 1000 currency notes, also known as demonetization, had several impacts on real estate prices in India:

1. Initial Impact: Immediately after demonetization, land deals decreased, and prices dropped by about 30% to 40% due to reduced cash transactions12. This was particularly evident in the secondary market and luxury segments, where cash components were significant15.

2. Long-term Effects: Over time, the real estate market began to stabilize. The reduction in cash transactions led to increased transparency and reduced speculative buying, making the market more resilient and driven by actual demand rather than black money13.

3. Price Adjustments: In some areas, property prices were expected to decrease due to the reduced use of black money and cash transactions, making properties more affordable for end-users24. However, the primary market, which involves new constructions and reputable developers, was less affected as it relies more on legal banking channels4.

4. Market Segments: The affordable housing segment saw increased activity as developers shifted focus towards this area, benefiting from government incentives and regulatory changes like RERA4. Luxury segments, however, faced challenges due to their reliance on cash transactions5.

5. Regulatory Environment: Demonetization, combined with other regulatory measures like RERA and GST, contributed to a more transparent and organized real estate sector, which is beneficial for long-term growth and investor confidence23.

In summary, while demonetization initially caused a drop in real estate prices and transactions, it ultimately contributed to a more transparent and affordable market, especially for end-users.