How RERA Will Impact Property Prices?

The introduction of the Real Estate (Regulation and Development) Act 2016 has launched a new episode in the real estate sector of the country. The RERA Act has been introduced for protecting the home buyers from getting exploited by the cunning property builders. It safeguards the interests of the property buyers and gives them the rights to question the builders.

The buyers can even file an FIR against the builders if they try to cheat them in any manner. While RERA addresses many such critical issues, it has also influenced property prices. It’s obvious that the nation is quite curious to know how RERA has affected the prices of real estates. So let’s go ahead and discuss.


Read: How RERA Will Impact Real Estate Sector?

Impact of RERA on real estate costs

The effect of RERA on property prices can be categorized under three basic categories, namely- short-term impact, Mid-term impact, and Long-term impact.

Short-term impact

With the introduction of RERA, a sense of credibility and transparency is anticipated in the real estate industry. This has helped in maintaining some degree of lightness in the property prices. The property buyers may now rethink about investing in real estate and can return to builders with renewed interest and enthusiasm. An immediate hike in the prices of real estate is not expected as of now.

Mid-term impact

As the confidence and reliability of the property buyers are increasing with the introduction of RERA, it can be expected that this will give a new boost to the financial institutes. The banks can come up with new home loan policies and fund assistance programs, making it easier for the property buyers to access the required capital for their investment. This will to keep the property prices considerably low.

Long-term impact

The additional prices associated with property registration and permits under RERA can make things costlier for the real estate builders or dealers. This may, in turn, lead to an overall increment in the cost of the project by approximately ten percent as result property prices can receive a sharp hike, depressing the property buyers.

Though RERA will provide the property buyers a better and more secure position in the real estate sector, it can lead to a hike in the real estate price in the future. In that case, some people may consider RERA to be more of a villain than a hero in the real estate industry. However, we are yet to see if these predictions stand true or just fall off as mere speculations.

Assuming things at this point will not do any good. So, on a clearer note, if we keep the future predictions aside, the introduction of RERA will bring down the property prices in the short-run. This is an obvious benefit for the buyers who can re-consider investing in real estate. The interest rates associated with the home loans will most expectantly be lowered providing more buyers access to funds. With this, the demand for real estate investment is sure to rise in the short-run.