Black money in housing market down 80% post demonetisation
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New Delhi: Housing brokerage firm Anarock said cash transactions in the primary residential market have reduced by at least 75-80 per cent since demonetisation of high-value currency was announced in late 2016.
"Black money (or cash transactions) in the housing market has reduced by at least 75-80 per cent since DeMo (demonetisation) in late 2016," Anarock said in a statement. In reply to a query, Anarock said that the data from is based on the focused group discussion with developers across the top seven cities, home loan disbursal data of the banks, review of registration documents, and inputs from its over 1,500 sales agents.
The average size of home loans has gone up, it added. It also clarified that the data is from the primary market (sale by developers) and not the resale residential market. Ananrock Chairman Anuj Puri said the once-ubiquitous cash component has not completely been eradicated from the Indian housing sector.
However, he said, "unlike earlier, people no longer buy homes primarily to get rid of black money - they now buy them because they want to own homes. Most of the end-users now majorly driving housing sales expect their property transactions to be transparent and above-board".
Nevertheless, Puri said black money is still finding its way into property transactions in smaller towns and peri-urban areas. "Overall, the use of black money in Indian housing has reduced by at least 75-80 per cent," he added.
Anarock said the secondary or resale housing market proved far more vulnerable to demonetisation than the primary market. This segment, along with luxury housing, historically drew the bulk of 'cash components'.
On factors behind the reduction in blackmoney, Anarock said "branded, listed players - who now attract a significant majority of housing demand to their projects - play by the book and avoid unaccounted monies in their transactions." After DeMo and the roll-out of RERA and GST, homebuyer demand gravitated towards branded products.
"Leading developers shifted their previous focus on luxury projects to the new demand for affordable and mid-segment housing," the consultant added.