Has demonetization helped real estate in Bangalore?

Enough has been said and written about real estate in Bangalore. We all know that it is the undisputed Information Technology hub in the country. The real estate sector here grew in large part things to the flourishing IT companies. We also know that it is going through a slump presently which is something that has been happening across the country. So we must know that all other slumps, this too will come to end soon enough.

One of the factors that can and is helping the real estate sector recover is the demonetization process. Even though many cities including Bangalore are going through a bigger slump thanks to demonetization, this process has also helped the cities in a way.

has-demonetization-helped-real-estate-in-bangalore

When the Reserve Bank of India recently announced that it will not be lowering its repo rate, it cited demonetization as one of the reasons behind its decision. It was waiting to see the full impact of this exercise on the entire economy before it announced another round of cuts. On the face of it, it would seem like demonetization has done more harm than good. Since the repo rate is the bank’s key lending rate and this has a direct impact on home loan EMIs, one would not be very wrong is thinking that if the repo rate remained unchanged, the price for a flat for sale in Bangalore will not come down.

But this is not the case and that too all thanks to demonetization. The banks are now receiving a lot of money. This has infused the banks with liquidity. They in turn are lowering the interest rates that they charge on their loans. Presently the interest rate on home loan has dropped to 8.65%. This number was in the 9.50% and above range pre demonetization. So those who are looking to buy plots in Bangalore will be able to get them at a much better rate now.

And it is hoped that the interest rates will come down in the days to come. A flat for sale in Bangalore might cost much lesser because the banks are in a competitive mind set because of the cash flow that has come to them.  The banks have been quite tardy in passing on the repco rate cuts that have been happening over the last two years by the RBI. The central bank has time and again reprimanded the banks under its control for not passing on the benefits of the rate cuts to the consumers. It finally took something like demonetization to bring down the price for plots in Bangalore and other such residential properties.

We don’t know if the central bank will cut the rate anytime in the near future. It all depends on the how severe the impact of demonetization is on the economy of the nation. But the banks have finally run out of excuses and it is time for the common man to enjoy some of the benefits of demonetization while it lasts.

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