Rising Prices of the Real Estate from the Perspective of RERA

Now and then, we keep on hearing that the real estate prices are rising higher. However, are we aware of the real culprit behind the scene? Well, most of us are not aware of it. Let us check it out here!
When it comes to the technicality involved behind the rise in real estate prices, RERA comes into play. Do you know what RERA is?
What is RERA?
RERA is the abbreviated form of Real Estate Regulatory Authority. The RERA lays down the following rules for the swift functioning of the real estate businesses:

  1. It is the foremost responsibility of the real estate developer to notify and register for their projects.
  2. Once granted permission, the developer must incorporate the entire project history and the future endeavors on the regulatory authority website.

These are just the premier ones. Irrespective of this, the real estate developer has to abide the other conditions too.

Why is it being said that the post RERA, the real estate prices will rise high?

To get an insight into the question, let us have a look at the following 4 reasons why residential real estate prices will rise post RERA:

The Supply:

It is expected that the introduction of RERA will conclude in streamlining the demand and supply in the frontiers of the real estate industry. The supply is predicted to witness a fall. It is parallel to the rule of RERA that the developers will initiate such projects, which can be accomplished within the stipulated period.

The Demand-side Story:

In the post RERA era, although the demand for the real-estate will remain firm, it will witness a certain level of redistribution. Because of this, the high risk-high return individuals will step aside from the investment. The investors will, in turn, prove to be a low key. It will follow the market demand of the investors for the increase in price with the rise in the real estate sales.

Developers might suffer huge expenses:

In lieu of the demand and supply, the holding cost for the developer’s shall peak in the end. To be more regulatory specific, the new projects cannot start unless it receives the complete approval from the regulatory authority. There exists an escalation window between the pre-launch and official launch. Earlier the window was open for the developers. Post RERA era, it will shut entirely for them. The additional holding cost will add-on to the overall purchase cost to be levied collectively on the buyers.

Prices of the Land:

The land cost might rise within the limits of the real estate prices within the city. It might result out of the post demonetization era, as there will be no way to divert the surplus from the business firms to the real estate investment. The post RERA era will mark the presence of forced-fed transparency. It will further abide the developers to purchase the lands using the legal funds.
On an average, we might expect a marginal rise in the prices of the real estate market. However, the market will witness the presence of few genuine buyers.
  

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2 comments

Avatar
Shwetank Gupta May 16, 2018 at 9:28 pm

Oh, thats why metros like Pune and Mumbai are becoming costly to live in years by years!

Radhika
Radhika May 17, 2018 at 7:11 am

Yes!

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