Will real estate bill increasing property prices?

Q: Is it true that bill will lead to increase in costs?? If yes, then why the property costs would rise??

Sukhpreet, Delhi-NCR

21st June 2013

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Replies (6)

Hi all.. this is an interesting topic.. I would like to add some info in this thread. The price hike on properties is not only because of the bill.. many states are rising registration charges for properties. This will also add to rise in house rates. Adding to this, global recessionary trends and regional political uncertainties have also been affecting the prices of properties in India.

Pranab Malakar, Delhi

26th June 2013

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Currently how developers manage to get cash is they start promoting their project before getting all approvals. They even start selling pre-launch or post launch which gets them liquidity at hand in the initial stage itself. But as per the bill, these will not be allowed until approvals are obtained. So developers will have to look for other options for which they will end up paying high interests. This extra costs will be passed on to developers through rising the project cost.

Karan Paathak, Ghaziabad

26th June 2013

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I agree that the bill is a good initiate and will curb many bad practices and help to regulate costs. But the policy should focus on getting fast approvals also. otherwise it is not easy for developers to get approvals and then start selling and building. All authorities giving approvals like- the water board, power board, civic bodies and the Ministry of Environment and Forests, etc. do take very long time (minimum 1 yr in most cases) to give clearances to real estate projects. And during this time, all interests and costs have to be borne by the developer which further adds risk.

N.Mathur, Delhi-NCR

26th June 2013

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Mr. Mathur, there is another way to look at the bill. The real estate bill demands selling the property as per carpet area and not by super built up area. But developers usually demand for some 20-30% in cash (black money) which they dont show in records most probably.. If they are losing some amount because of this carpet area based calculation, then they may ask for more unaccounted money. So this bill instead of curbing negative practices in the system, will indirectly encourage black money.

Anil Singh, Noida

26th June 2013

I heard that the real estate bill is going to have a cost push effect by which the property prices are likely to see a hike of 40-50 percent. As our friend says it is not only because of the new bill but on overall, prices will be hiked. Another important thing is whether a property is sold on carpet area basis or super built-up area basis, the total value would remain same with the cost per square foot going up. Developers will definitely not agree to incur loss with selling at same prices even while carpet area is considered.

Mritunjoy Deb,

21st June 2013

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Hi guys, housing rates will rise but the reason will not only be the realty bill. It seems that the price factor in real estate will be affected by various reasons.

Karthik, Gurgaon

21st June 2013

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Yes.. many real estate experts are saying that property prices will increase by at least 30% because of the bill. Some say there will be 50 % rise.. Developers will have to spend more for the approvals and also they are not allowed to advertise or start selling the properties without approvals. So in this time their investment will be in a deadlock and the financial pressure increases on them. They will pass on the same burden to buyers.

Amit Raj, Delhi-NCR

21st June 2013

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