Guideline value is the main culprit for this downfall. Last year, real estate transaction data is out. Lessons to be learned. Overall there is a loss of revenue to TN government (from stamp duties, registration costs) compared with previous years. The govt. is sitting in this issue, with out revising the guideline from 2012.
Below data are from Tamil Nadu real estate market alone,
- Last year, 2016 – the total number of property registrations across tamil nadu is around 20L only, which was the lowest in last 10 years.
- 2011-12, saw the highest growth in property registrations around 35L transactions. Since then, the industry is facing slump in sales.
- Due to demonetization, high court registration ban on unapproved properties, economic slowdown were also some of the reasons for poor performance.
- Also, last year, the govt. could collect only Rs. 7000 crores as registration and stamp duty fee, which is 19% steep fall compared to the previous year.
From 2012, the real estate industry is facing slow growth due to high guideline value. The present guideline rates are at least 10% higher than the market value, making registration costs exorbitantly higher. In many states, the guideline values are kept at 4-5% of market value. There are various news floating in news media that govt. is considering correcting guideline value based on true reflection of market. Too late, but still, better to act fast now.