How the Real Estate Price is Expected to Inflate after RERA
The real estate sector comes under the ambit of a regulatory authority, under The Real Estate (Regulation & Development) Act, 2016 (RERA). The regulatory authority is all purposed to guarantee transparency, to remove information irregularity and to implement an undeviating ‘code of conduct’ in place for the real estate players in all states across the nation.
As the experts have been pointing out some positive aftereffects since the time when the term RERA was coined. But there are some elements that would possibly inflate the real estate price in days to come. Here’re some important things that are supposed to play a key role in inflating the price.
The supply side:
The Real Estate Regulation Act (RERA) will have a key role in determining the overall economic framework of the real estate industry. As per the experts, the supply side in real estate is going to be affected as the developers will be launching only those projects that are guaranteed to be completed within the set deadline. Now the RERA will never allow them to simply introduce a project and start pooling up funds from the people.
Consequently, it will end up inflating the price due to poor supply as opposed to increasing demand from the people.
The demand side:
Unlike the supply side of real estate industry, the developers are going to see a substantial surge in the demand as the regulatory authority is expected to reestablish the credibility of real estate industry. Therefore, the industry will have now more end-users due to the transparency and flawless conduct ensured by the newly-enacted law.
With increasing demand from end-users and reducing supply from the real estate developers will eventually end up increasing the price of real estate.
Cost to be suffered by the developers:
In addition to the demand & supply dynamics, there is another element—holding cost—which is probably to inflate the price. As per the RERA, there will be no any real estate project launched until all approval is in place. And the period between ‘pre-launch’ and ‘official launch’ may incur additional cost for the residents.
After the demonetization, the cost of land has already inched upwardly. But after the RERA, the developer may have to endure some additional cost on the purchase of land for real estate projects. Some of the clauses in the act are necessarily aimed at forcing the developers to invest only legal funds in purchasing land for the real estate projects.
On the positive note, the stability in demand side and the recent reduction in home loans can be best positive aspects that will keep on encouraging the developers in days to come. And it is highly expected that the surge in real estate price may come to a stable point once the code of conduct is implemented across the industry.