NEW DELHI: Increase in circle rates by up to 20 per cent in the national capital could further dampen investor sentiment and affect housing market, according to global property consultants.
The Delhi government yesterday raised the circle rates - the minimum valuation at which properties have to be registered - by up to 20 per cent with an aim to check black money component in sale and purchase transactions.
CBRE South Asia Pvt Ltd Chairman & MD Anshuman Magazine said: "This move of increasing circle rates by 20 per cent across the board will have an impact on home buying decisions in the capital.
With the housing market already going through a slowdown, this announcement coming just before the festive season is likely to further dampen the investor sentiment."
Circle rate has been increased to Rs 7.74 lakh per square metre of land from Rs 6.45 lakh in category A housing colonies like Greater Kailash, Defence Colony, Gulmohar Park, Panchsheel Enclave, Anandlok, Green Park, Golf Links and Hauz Khas.
JLL India Associate Director (Research) Rohan Sharma said the decision to hike circle rates would affect demand in Delhi's secondary property market, which is already facing slowdown.
"It is a good move to bring circle rates in line with the current market price. This will curb black money in property market and bring transparency in sales transactions," Sharma said.
He said, however, the hike should not have been uniform and more ground analysis should have been done before raising the rates.
Asked about impact on demand, Sharma said: "Things are already slow in South Delhi. It will have more dampening affect. Pace of transaction will slow down."
"Buyers will have to shell out more money which means increase in the cost of apartments".
Sharma noted that developers are already facing slowdown in demand and consequent liquidity crunch.
The land rates in Category B like Andrews Ganj, Kalkaji, Munirka Vihar and Nehru Enclave have been increased to Rs 2,45,520 as against current rate of Rs 2,04,600 per sq meter.