BackMoney Guru | Over-supply to hit premium housing
Money Guru | Over-supply to hit premium housing
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We are hearing of residential project launches almost every day. Is there a possibility that this will lead to an oversupply?
The middle and affordable category of housing has robust demand. This would continue to drive growth. Oversupply will hit the premium segment, where prices are still very high, but there are very few buyers. For example, at Saket in New Delhi or in south Mumbai, rates are in the range of Rs45,000 per sq. ft and Rs70,000 per sq. ft, respectively. Rates in the high-end housing category have already reached their peak in Mumbai.
With housing projects available at various prices, even end-users have developed an investor mindset. How can an end-user benefit with so much on offer?
What are some of the challenges for the real estate sector?
Lack of regulation for the sector is the biggest challenge. Title deed frauds are common in the secondary market.
What should one do to prevent frauds relating to title deeds?
A buyer should verify the property from banks. In case of any loan running on that property, the bank will have a record. Those buying directly from the developer should get the allotment letter. After the allotment, buyers enter into an agreement with the builder. Once the property is registered, a society is formed, which gives the buyer a membership of the resident’s welfare association. By going through the procedure, one can reduce the chances of any property dispute arising out of title deeds.
The task force of the finance commission has recommended that the real estate sector should be integrated into the goods and services tax (GST) framework by subsuming stamp duty on immoveable property levied by states. GST is to apply to all newly constructed property. How will this affect buyers?
This will put an end to taxes at various levels. It would reduce a lot of administrative hassles. People will not undervalue their property just to save a few thousands under the stamp duty. This will create a direct source of revenue for the government. However, it should not have any direct impact on property rates.
Pranab Datta is the vice-chairman and managing director of Knight Frank India
Devesh Chandra Srivastava
devesh@livemint.com
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