New Delhi: On Friday, the Delhi government cut circle rates by 20 per cent, a step that will bring down the capital city’s exorbitant property prices. Both forms of properties around the city are included in the new order. According to reports, the goal is to raise the demand for real estate transactions that have been suppressed over the past few years.
The Aam Aadmi Party-led government’s move was welcomed by real estate developers and industry stakeholders. They claimed that the decreased circle rates would result in a lower valuation of real estate and would assist interested buyers, who would otherwise be left out because of the capital’s high property prices.
Maintaining that the circle rates have a direct bearing on the actual market rates, Mani Rangrajan, Group COO, Housing.com, Makaan.com & Proptiger.com, said, “A reduction in circle rates not only will soften property and land prices in Delhi but also put pressure on other adjoining realty markets of NCR. This will bring in a new set of buyers to the market. Reduced prices may also lower the average age of property buyers in Delhi as properties will be within reach of the younger generation.”
The realtors see the step as a timely one which will provide a boost to the real estate sector. Achal Raina, COO, Raheja Developers, said, “The decision by the Delhi government comes at the right time when the industry is recovering from the tumultuous impact of the pandemic. The reduction in circle rates will make things more affordable and should increase the number of transactions. The decision of the Delhi government may also lead other states to take a similar step in near future as a booster to the Real Estate sector.”
When real estate is in the revival mode, decreasing the circle rates will have a positive impact on the market. Akshay Taneja, MD, TDI Infratech, said, “The sector is already facing problems to contain the prices of units because of increasing raw material cost, and in this scenario, low circle rate would be beneficial for the residential sector. The secondary market will go in for more registries as stamp duty and registration charges will come down.”
“This indeed is a prudent step as it will give a boost to residential projects and commercial projects. As markets are reviving it will render push to transactions volumes. We have already seen the positive impact of the reduction of the stamp duty in Mumbai and this will help in faster recovery of Delhi real estate,” added Ankit Kansal Founder and MD 360 Realtors.
Last month, Maharashtra reduced real estate premiums by 50% that provide a boost to the sector in the state. After being hit by the pandemic, the market in the state was already on the up as housing sales value saw in MMR witnessed an increase of 145% over the previous quarter, Pune saw 125% increase over pre-COVID-19 levels.
The reduction in premium helped the Mumbai market as the city collected as many as 22 premiums under various heads, which is higher than other top cities. “High premium puts a financial burden on developers leading to higher costs for the homebuyers.
In the current economic scenario, the steps such as the one taken by Maharashtra or Delhi would ease the burden and soften the prices resulting in more sales. The latest decisions will be a boon for the sector’s overall development,” says Kapil Kapur, Director-Sales, Strategy & Business Development, Bullmen Realty.
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