Black money in primary residential market reduced by 75-80% after demonetisation: Anarock

 

Anarock, the housing brokerage firm stated on Wednesday that cash transactions in the primary residential market have reduced by at least 75-80% since the demonetisation of high-value currency was announced in late 2016. In reply to a query, Anarock informed that the data was obtained based on a focused group discussion with developers across the top seven cities, home loan disbursal data of the banks, review of registration documents, and inputs from its over 1,500 sales agents.

 

Anarock Chairman Anuj Puri noted in their statement that the average size of home loans has gone up, adding that the once-ubiquitous cash component has not completely been eradicated from the Indian housing sector. He also clarified that the data is from the primary market (sale by developers) and not the resale residential market.

 

‘Unlike earlier, people no longer buy homes primarily to get rid of black money – they now buy them because they want to own homes. Most of the end-users now majorly driving housing sales expect their property transactions to be transparent and above-board’, Puri said. However, Puri pointed out that black money is still finding its way into property transactions in smaller towns and peri-urban areas. Anarock Chairman further said that the secondary or resale housing market has proved to be far more vulnerable to demonetisation than the primary market. This segment, along with luxury housing, historically drew the bulk of ‘cash components’.

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Anarock, while noting the factors behind the reduction in black-money, said that ‘branded, listed players – who now attract a significant majority of housing demand to their projects – play by the book and avoid unaccounted monies in their transactions. After DeMo and the roll-out of RERA and GST, homebuyer demand gravitated towards branded products’. ‘Leading developers shifted their previous focus on luxury projects to the new demand for affordable and mid-segment housing’, the consultant added.

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Anarock also pointed out that the housing sector’s rough ride due to demonetisation has smoothened. ‘Still, DeMo has changed the very fundamentals of why and how residential real estate is bought and sold in India. Today, housing sales happen because of actual demand, not as a means to launder black money’, Puri said.