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Business EconomyPosted at: Jan 20 2019 12:06PM


Real estate market down after revision of guidance value in Karnataka

Mysuru, Jan 20 (UNI) The Karnataka government’s revision of guidance value of properties has hit the real estate market across the state.
The growth of real estate sector had seen flat growth since the time of demonitisation and now even the registration in the Sub Registrar offices across the state has come down. However, the officials has dismissed the allegations and claimed that it was only 5 to 25 percent hike in guidance value . the same situation had faced when the demonetisation hit several businesses in the last two years ago.
But, Udaya Kuamr, a sale dead writer told UNI that the increase in a eastern parts of the city including Ring Road adjoining areas, was to the tune of up to 100%. per cent.
“The steep hike will hit the property market hard. Already, transactions have dwindled after demonitisation and introduction of Goods and Services Tax (GST). Such a steep hike will bring the transactions to a virtual halt,” he feared.
“Generally, guidance values are fixed on the average rates at which transactions have taken place over the last few years. We are awaiting the printed copy of the revised sub-registrar rates to come from the Government Printing Press,” an official said.
Officials in the District Registrar said the printed copy is expected very soon, but the sub-registrars have a photostat copy of the notified rates based on which registrations are taking place.
Officials said the number of property transactions may have come down marginally since January 1 when the new rates were introduced. “Generally, the number of registrations are poor during Dhanurmasa,” she said, hoping it would pick up in the coming days.
The setback to the real estate market in the wake of the hike in guidance value will only be temporary, according to experts in the real estate industry in Mysuru. “Everything will settle down in a few months,” said representative of CREDAI in Mysuru K. Sriram.
Though organised developers, who are building apartments, are unlikely to be affected much by the increase in guidance value as they are already registering flats at a value higher than the SR (sub-registrar) rates, the unorganised market involving sale of sites and individual houses is likely to be affected. For, a large number of transactions in the unorganised market are conducted at a rate much below the market value and mostly at the guidance value. Both the seller as well as the buyer manages to evade tax by carrying out transactions below the market value.
Mr. Sriram recalled that there was a similar hue and cry over collapse of the real estate market following the global downturn in 2008. But, the markets gradually picked up, he said.
“In terms of the number of properties registered and sale deeds, Mysuru is witnessing a slow revival but is yet to catch up with the the pre-demonetisation levels,” said a senior official in the Mysuru South sub-registrar’s office. Revenue generation through registration of properties has remained stagnant and there was no year-on-year growth.
“While the number of properties registered was less, the current trend among buyers is to register the properties at a rate higher than the guidance value to reduce their exposure to tax liability and this is contributing to the revenue.’’
a leading builders of the city said the immediate impact of increase of guidance value was a sharp fall in the number of real estate registrations but it will be steady recovery though it was yet to attain the earlier levels. But the exercise definitely did not result in a slump in property rates as expected, he added.
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