Reducing circle rates will help to further bring down property prices, believe experts
'This would be a big relief for people willing to buy property and a big boost up for real estate sector,' Delhi chief minister Arvind Kejriwal said
To boost the ailing real estate sector, the Delhi government on Friday announced to cut the circle rates of residential/commercial/industrial properties in Delhi by 20%. The reduction in rate will be available across all the categories for the next six months, the Delhi government announced. "Circle Rates of Residential/Commercial/Industrial Properties in Delhi reduced by 20% across all categories for next 6 months. This would be a big relief for people willing to buy property and a big boost up for real estate sector," Delhi chief minister Arvind Kejriwal tweeted on Friday.
"Reducing circle rates, even for only a limited period, is great news for the Delhi housing market because it help to further bring down property prices," said Anuj Puri, chairman, ANAROCK Property Consultants.
Circle rates refer the minimum price set by the state government at which a property has to be registered for transactions. The rates are revised from time to time according to market dynamics. Circle rates vary within cities in the same state, depending on the market value and facilities available in the area. These rates are an indicator of likely prices of properties in various areas.
The real estate sector has been severely affected by the coronavirus pandemic in the country. Kejriwal government's latest move is expected to soften the prices of the properties and revive the real estate sector.
"This step indeed will propel buy and sell activity. A move of this nature will also enable owners of large assets to mobilise transactions which otherwise were challenging given the size and consequent values," said Shveta Jain, managing director, Residential Services, Savills India.
"A reduction of 20% in the circle rate would have an impact close to reduction by 1% in the stamp duty or registration charges. The department was directed to do an exercise accordingly," the statement said.
Welcoming the move, Mani Rangrajan, Group chief operating officer, Housing.com, Makaan.com & Proptiger.com said, "The circle rates have a direct bearing on the actual market rates, a reduction in circle rates not only will soften property and land prices in Delhi but also put pressure on other adjoining realty markets of the national capital region."
"Considering the strong revival post lockdown easements, this augurs well for the market. By bringing down the circle rate, the Delhi government seeks to create a conducive environment for accelerated housing absorption in the market," Puri added.
"This will bring in a new set of buyers to the market. Reduced prices may also lower the average age of property buyers in Delhi as properties will be within reach of younger generation," Rangrajan mentioned.