What will be the effect of recent demonetization of rs500 and rs 1000 notes on the real estate or property business?

The recent demonetization of Rs 500 and Rs 1000 notes, which occurred in 2016, had significant effects on the real estate sector in India. Here are some key impacts:

Immediate Effects

• Decline in Property Prices: The sudden withdrawal of high-value currency notes led to a decrease in demand, causing property prices to drop. This was particularly pronounced in the secondary market and luxury segments, where cash transactions were more common13.
• Slowdown in Sales: The uncertainty and liquidity crunch resulting from demonetization led to a slowdown in property sales. Buyers adopted a wait-and-watch approach, expecting prices to fall further34.
• Impact on Cash Transactions: Demonetization significantly reduced cash transactions in real estate, which were prevalent in the secondary market and luxury segments. This shift towards digital transactions increased transparency12.

Long-Term Effects

• Increased Transparency and Accountability: The reduction in cash transactions, coupled with reforms like RERA and GST, has made the real estate sector more transparent and accountable. This has attracted institutional investors and improved market credibility12.
• Market Consolidation: The implementation of RERA led to increased compliance costs for developers, resulting in a consolidation of the market. This has driven out smaller, less compliant developers and strengthened the position of larger, more transparent players3.
• Shift to Affordable Housing: The focus on affordable housing, supported by government schemes like PMAY, has helped recover demand in the real estate market. This shift has made the sector more resilient and driven by actual demand rather than speculative buying35.

Overall, while demonetization initially disrupted the real estate market, its long-term effects have been positive, promoting transparency and attracting serious investors.