Will prices go up because of RERA?

The Real Estate Regulatory Act will push demand for housing and prevent project delays for increased home buyer confidence. However, since projects cannot be launched without prior approvals, the resultant delay is likely to push up housing prices, say developers.

Fewer project launches would mean decreased housing supply and more expensive housing. Possible solutions, most developers feel, is to launch projects once the super structure is ready. In fact, some builders are going ahead and contemplating launch of completed projects to be sure that they comply with all RERA norms when they are introduced next year.

Considering current market sentiments, however, real estate experts have a different view. They say prices will stabilise and not increase.

While approximately 4,500 housing units were launched during the peak years of 2012 and 2013, the average number of new launches this year was close to 3,000 projects. “New launches may probably reduce further once RERA is implemented. There will be a lull initially and a slowdown in the number of new launches which may come down to 2,000 launches in a year’s time,” says Pankaj Kapoor of Liases Foras.

Currently, annual sales total 2.5 lakh units against 11 lakh of unsold inventory across major markets in the country. If the market were to work towards attaining efficiency post RERA, sales should ideally be around 10 lakh units, which means a fivefold increase in sales, which is not likely to happen. So, at any given time, there will always be a surplus in the market. Enough inventory will be available as purchasing power of people is not likely to immediately go up to enable them to buy properties at prevailing high prices. This affordability gap will ensure that there is enough inventory which in turn will stabilise prices, not increase it, says Kapoor.

courtesy: paper.hindustantimes.com

Will prices go up because of RERA?
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