Since the day 500/1000 rupee notes were banned by the RBI on the advice of Shri. Narendra Modi's government, a lot of property seekers have written to us with a range of questions all centering around the impact of currency ban (demonetization) & its implications on their home buying. We realized a lot of other people whom we know/might not know will have similar questions. This document is a compilation of 7 frequently asked questions & our answers to those. We sincerely hope you find this to be of good information & value. For specific queries, write to us at ask@indiaproperty.com or call us on (STD) 3333 7777.

1. 7 FAQs on Demonetization & its
impact on Home Buying
Phone: (STD) 3333 7777Email: ask@indiaproperty.com

2. Over the past few days, a lot of property seekers have written to
us with a range of questions all centering around the impact of
currency ban on real estate.
We realized a lot of other people whom we know/might not
know will have similar questions. This document is a compilation
of all such questions & our answers to those.
We sincerely hope you find this to be of good information &
value.
What is this about?
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3. Warren Buffett once said as an investor it is wise to be
“Fearful when others are greedy and
greedy when others are fearful.”
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4. Your Cheat-Sheet to understand impact of demonetization
on Home Buying
Primary (New
residential
properties)
Ready to move in/Close
to completion
Prices will be stable. But
builders are likely to reduce
prices for serious buyers during
negotiations
Prices will go up as demand goes
up due to reduced home loan
rates, market sentiment improving
Under Construction/New
Launches
Construction delays expected.
New launches will be postponed
RERA & GST will drive cost of
construction up putting an upward
pressure on prices
Short term forecast (next 6
months)
Medium term forecast (6 - 18
months)
Great choice if u buy now!
Neutral
Wait-n-Watch
Secondary (Resale
properties)
Across all price brackets
(Affordable to Super
Luxury)
Some great short term price
bargains might come up as a
result of distress sale.
With fresh cash entering
circulation, resale demand will pick
up & prices would be marginally
lower than prices before
demonetization
Land
Metros
Marginal impact on prices as market prices are close to guideline
value. Sellers will hold off selling till another 18 months
Tier II/III
Considerable price drop expected. But wait-n-watch will be a good
approach here.
Phone: (STD) 3333 7777 Email: ask@indiaproperty.com

5. Frequently Asked Questions
1) Will home prices come down as a result of demonetization?
2) What is likely to be the impact of demonetization on real
estate?
a) Opportunity in new residential properties
b) Opportunity in resale properties & land
3) Will builders reduce the price of their properties?
4) If land prices are expected to come down, won't that bring
down property prices?
5) So, is now a good time to buy a property?
6) What does the next 6 – 18 months hold for a property
buyer?
7) Can I wait till another 6 months & buy a property after
that?
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6. 1) I have been hearing that real estate prices will fall due to
demonetization. Is that true? Will home prices come down?
• NO because the new property market which is driven by home loans usually has minimal
cash component in its transactions. Chances of prices coming down in the new
property market as a result of demonetization is very low.
• Moreover, property prices have grown by just 3 - 4% (Y o Y) in most cities in the last 4 years -
much lesser than the rate of inflation (6% +) & are closer to circle rates in most metros. Is
there scope for further drop? Very unlikely – More on that here >>
• YES because resale & land transactions have always had cash as a major component in
their transactions and are likely to see a price correction. These segments will see some
distress sale happening in short & medium term. Luxury properties are likely to see a higher
price correction in the short term
NO & YES!
Phone: (STD) 3333 7777 Email: ask@indiaproperty.com

7. 2) What is going to be the impact of demonetization
on real estate?
• Technically, demonetization is likely to have minimal impact on the new property market.
Resale & land property markets are the ones that will be affected
• But because a lot of news articles do not distinguish these 3 segments while predicting
impact, a negative sentiment has overtaken the market as a whole.
• Overall real estate transactions will be lower due to negative market sentiment for the next
3 - 6 months.
Negative sentiment - That's where the opportunity lies.
Read on..
Real Estate
New Properties
(Primary)
Resale Properties
(Secondary) Land

8. • New residential properties will see lower demand due to negative market
sentiment & perceived uncertainty
• Builders will face a cash crunch due to sudden drop in sales
• To attract buyers & maintain sales volume, builders are expected to introduce
attractive offers/freebies & other benefits like never before
• Builders are NOT likely to reduce prices because of reasons explained in slide 9
• But they will be willing to negotiate on prices with serious buyers across the table
& offer considerable value for the same price (in form of modular kitchen, free car
park etc.).
• If you are salaried/self employed and looking to buy your first home, next 6
months is a wonderful opportunity to save big.
Your bargaining power with the builder has just gone up a few notches.
2.a) Opportunity in the new property segment
Phone: (STD) 3333 7777 Email: ask@indiaproperty.com

9. • Resale & Land segment will see a direct impact from demonetization since cash
component plays a big role in these transactions.
• Unaccounted cash dominates in resale & this is what most articles refer to when
they talk about demonetization impacting real estate
• Demonetization has sucked out most of the unaccounted cash from the system.
Affluent buyers who could pay cash & buy are out of the market. Temporarily!
• This leaves just the end users with sufficient loan eligibilities in the market. Lower
demand would mean pressure on sellers to reduce prices
• Sellers with immediate need of money will go for a distress sale & be ready to sell
off at a lower price.
If you get hold of such a deal in the next 6 months, you will reap the rewards in the
long term
2.b) Opportunity in resale property & land
Phone: (STD) 3333 7777 Email: ask@indiaproperty.com

10. 3) Will builders reduce the price of their properties?
Very unlikely. Why?
• In last 4 years, property prices have grown at a lesser rate than inflation - which
means properties are already being sold now at 2012 prices (price adjusted
for inflation)
• Most builders have acquired lands at higher costs, input costs of construction have
gone up in the last few years
• With RERA around the corner, builders will be required to comply & cost of
compliance will squeeze margins further
• An explicit price drop will also impact builder’s credibility with past &
existing customers & most builders would not run that risk
• Instead, builders will be willing to negotiate on prices with serious buyers
across the table & offer considerable freebies in form of modular kitchen, free car
park etc. till the market sentiment turns positive
Phone: (STD) 3333 7777 Email: ask@indiaproperty.com

11. 4) If land prices are expected to come down, won't that
bring down property prices?
• Land acquisitions/transactions where cash plays a major role
will witness higher impact
• But as we explained, not everyone might be willing to sell at
lesser price. Only distress transactions will happen
• It will take at least 3 - 5 years for these to enter the market as
fresh projects. So no short/medium term impact expected in
the residential market.
• Anyways, given the liquidity crunch, no. of new project
launches are likely to come down over the next 12 months
Phone: (STD) 3333 7777 Email: ask@indiaproperty.com

12. 5) So, is now a good time to buy a property?
If you are looking to buy your first home, a big resounding YES! Why?
• Reason 1: Builders would be in need of cash liquidity to fund construction
& pay off wages. They would be willing to negotiate & offer the best
possible price across the table to serious buyers.
• Reason 2: Your options just got wider. Resale properties that were out of
your budget reach earlier will now become affordable due to distress
sale.
• Reason 3: 90% first time home buyers fund their property purchase
through home loans. With home loan rates expected to come down very
soon, EMIs will go down considerably making homes cheaper or can get
you a bigger home @ same price.
It’s now up to smart buyers to make use of the opportunity
Phone: (STD) 3333 7777 Email: ask@indiaproperty.com

13. 6) What does the next 6 – 18 months hold for a property
buyer?
• Though the last 3 years has always been described as a buyer’s market,
the power a buyer could wield has just gone up a few notches. This is
expected to be the case for at least the next 6 months
• After this phase, with loans getting cheaper, new currency coming into the
system & sentiment turning positive, demand is expected to go up.
• Since new launches are also likely to slow down, demand for ready to
move in homes already in the market will intensify. With more
buyers entering at this point, prices in the primary market are most likely
to go up.
Phone: (STD) 3333 7777 Email: ask@indiaproperty.com

14. 7) Can I wait till another 6 months & buy a property after
that?
• Of course you can. Buying a Property is a big decision & you should do it only when
you think is the right time for you.
• Only downside being after 6 months, you will be competing with more buyers &
you might have to buy the same property at a slightly higher price
• We would suggest you to however start your search process now so you will
have enough time to understand the market scenario & assess your options
• Also, though you don't plan to buy a property right away, getting in touch with
sellers early in your search phase will indicate you are serious & might fetch you a
great offer not available else where.
• Feel free to avail professional help if necessary. It would be worth it.
Phone: (STD) 3333 7777 Email: ask@indiaproperty.com

15. 4 things you could do to take advantage now
1. Get to know your affordability - Get a pre-approved home loan & arrange funds
for the 20% that has to come from your pockets
2. Start searching for properties with a trusted advisor & have a range of suitable
options ready
3. Start getting in touch with sellers, visit the projects physically & show them you
are serious
4. Brush up on your negotiation skills. You will save a few Lacs!
We at Indiaproperty.com are always there by your side to help you with any thing to
do with properties.
Phone: (STD) 3333 7777 Email: ask@indiaproperty.com

16. Thank You for Reading!
If you have specific questions/feedback to offer, write to us
at ask@indiaproperty.com
or call us on (STD) 3333 7777 & discuss your concerns
with our experts.
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