The real estate market is in flutters since the news of proposed increased circle rates has come out. The administration has decided to notify the increased rates from August 19. However, the window of hope for the sector is in the option of registering objections on the authority’s website till August 16, 2021. Meanwhile, realtors have expressed concern as the step will negatively impact the market, trying to overcome the pandemic-induced challenges.
The expected hike may vary from 60 per cent to 100 per cent in various areas. Manoj Gaur, CMD, Gaurs Group and Vice President – North, CREDAI National, said, “When the real estate sector was gradually getting back on track after the first wave of the pandemic, the second wave arrived and dented the progress. We are just beginning to take steps to get back on track, but the recent move to increase circle rates in Noida might once again hamper the sector’s growth in the region. With more than 100 ancillary industries dependent on the sector, which is one of the largest contributors to India’s GDP, the real estate sector needs hand-holding at the moment. An increase in the circle rate at this critical moment will prove detrimental. In fact, we should look at a measure like reducing stamp duty and further sweetening home loan rates to boost the sector in the region.”
The Q2 2021 reports were encouraging as various IPCs highlighted the positive trend in sales and buyers’ enthusiasm towards real estate assets. Vikas Wadhawan, Group CFO, Housing.com, Makaan.com and Proptiger.com, said, “The timing of the increase in circle rate is not appropriate, which will further lead to delayed recovery from the impact of the pandemic. The authorities should have taken inspiration from states like Maharashtra that witnessed a 270% jump in property registration after stamp duty cut. The current situation calls for measures that can boost home buying sentiments which will in turn increase revenue through sheer numbers without increasing the circle rates”.
Wadhawan further added “As per the recent consumer sentiment survey by Housing.com & Naredco, people are looking for Discounts and Flexi Payment schemes to conclude home buying decision and this increase in circle rate will have a negative impact on the fence-sitters”.
Shravan Govil, CEO, Omaxe Heritage Pvt. Ltd., feels, “The increase in circle rate by the Gautam Buddh Nagar administration will dampen home buying sentiments in Noida and Greater Noida region. The NCR market is already struggling with inventory overhang and low sales. An increase in circle rate at this stage will push the fence-sitters away from the housing market and delay the recovery of real estate in the region.”
Realtors feel that increasing the circle rate when the sector needs help from the government and state government is discouraging. Amit Modi, Director, ABA Corp and President (elect), CREDAI Western UP, said, “During the pandemic, real estate experienced a significant decline, but it has recently recovered, with individuals returning to look at potential apartments for future living. People will be discouraged from investing in real estate as the circle rate increases due to a lack of finances as people lost jobs or part of their income. People who were on the fence about investing in real estate or buying a home will confront a new challenge due to this hike, directly affecting people’s pockets. We were expecting a decrease in the circle rate to bring more money into the market at this point; rather than increasing circle rates, the exchequer and authorities would have made more money by decreasing it.”
Harvinder Singh Sikka, MD, Sikka Group, added, “Rather than increasing the circle rates, the administration should have maintained the current levels. Buyers are seeking relief, and the increase might turn out detrimental to the market. The developer community is currently utilising all available tools to help buyers in realising their dream of owning a real estate asset, but it requires government help.”