Realty check: High prices in Chennai to stay

Chennai: Brushing aside claims made by reports on the probabilities of demonetisation leading to a fall in property prices, real estate developers say that prices are likely to remain high due to subdued supply, and demonetisation has not directly affected organized sections of real estate. Speaking specifically of the Chennai market, builders say that property payment is dominated by cheque payment apart from loans and this accounts for the lack of impact due to demonetisation.

The past few years has seen a lull in real estate and this caused prices to remain static, and with rules and regulations brought in by the new government to organise the sector, builders and developers say that prices have a higher chance of increasing. “While there is a surety that prices will not come down, there are high chances that prices will rocket,” said Rajeeb Dash, head of marketing, Tata Housing. Rajeeb said that demonetisation does not have a direct impact on the primary market.

“Supply is in a lull but sentiment attached in the current scenario is pushing people to invest in property. Also, lower interest rates could attract more people to buy property. Low new launches coupled with increased supply will drive prices up north,” he told Deccan Chronicle. Realtors feel that with the Real Estate (Regulation and Development) Act being passed, more regulations will cost buyers dear. “When you have an act that regulates the sector to ensure protection to a buyer, a cost comes with it,” said Dr R. Kumar, managing director of Navin’s. “Recent changes including the GST may bring in more organisation in the sector, including a price rise because compliance and construction costs have increased over the years even though demand is uniform”, he said.

He added that with lower interest rates from banks after the money inflow post demonetisation, the benefit would go to realtors, as more buyers will come forward for property purchase.

Higher withdrawal limit cuts ATM queues slightly:

With ATMs dispensing Rs 4,500, queues in front of ATMs have reduced marginally but banks continue to be crowded as cash crunch continues. At present the ATMs are loaded with cash only during evenings and when Deccan Chronicle visited a few branches of Indian Bank, State Bank and Indian Overseas Bank on Wednesday, the bank account holders demanded functioning of ATMs throughout the day. “Demonitisation had severely affected the salaried class. Paying rents and monthly bills has now become a headache due to the cash withdrawal limits,” said S. Ezhumalai waiting at Pursawalkam IOB branch to withdraw cash. The demonitisation had also affected the other banking services like pass book entry and issue of cheque books. Earlier it would take five to ten minutes for a passbook entry, but now it takes more than 15 minutes,  rued senior citizen S. Gopalakrishnan of Villivakkam.  

The only respite in the past four days is that the State Bank and Central Bank of India ATMS are now dispensing Rs 500 currency notes. “The situation will become normal if more 100 and 500 rupee notes are dispensed in ATMs, said”, S. Purushoth, a security guard in nationalised bank. Unlike last month, verbal arguments have come down in banks as the public are now understanding that the banks are helpless and we are hoping for more cash supply from the reserve bank, said a senior manager with Central Bank of India.

It may be noted that managing director and the CEO of Punjab National Bank Usha Ananthasubramanian who was in Tiruchy opined that it would take two months for the banking situation to normalise.