The real estate market in Tamil Nadu witnessed a steep downfall in the year 2013.
There were lot of reasons speculating in the market, of which some I found reasonable, which are listed below.
1) in order to increase the revenue and drive tamil nadu’s election promises, the aiadmk government increased the land guideline
value. Revising the guideline value is good idea, it’s due too.. But they increased exhorbitantly, making people to pay more for
registeration.As a result, there came a huge gap in demand and supply, where people are unwillingly to buy at present rates ( inclusive of registration costs) and sellers not willing to settle for lower rates. So market fell flat.
2) Amendments in Power of Attorney – Most real estate business people use this instrument to buy property at low rates and take power and sell at higher rates at short time. The recent changes which made poa valid for 30 days, and for beyond the poa holder need to present a life certificate, which created a mistrust between 2 parties and there was a raise in complaints in police stations, which resulted in lower sales and reduced the morale of the market.
3) Difficulties in getting gold loans – in order to curb black money and squeeze money in the market to contain inflation, the reserve bank of India has restricted banks to stop giving gold loans for more than 1 lakh. If person needs more than a lakh, he needs to furnish the receipt claiming the ownership of the jewels. This made impossible for people to raise funds easily.
4) unreasonable land/ home rates – brokers/ people involved in real estate business have raised the rates to an unreasonable level for their selfish motives, which made buyers to think twice or postpone buying decisions.
5) increase in home loan and lending rates – again banks have increased rates to contain inflation, resulting in lack of funds.
So what to expect in2014
– once there is a change in central government, policies and if there is a good overall economic growth, may fuel real estate market.
So let’s hope for the best…
Cheers
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