Real cause of crash in Kerala’s property market

In a recently held survey, it was found out that among the South Indian states, Kerala property market is the worst performing in recent times. There is a drop of 40-50 % in NRI’s buying homes in Kerala.

Analyzing the major reason for this, one can figure out that this is because Kerala’s economy is very much reliant on foreign remittance than any other Indian state. The tough job market in the Gulf, mounting job losses of NRI’s, steep taxes in Kerala all added fuel to the fire unleashing havoc across Kerala’s property market. Even the weak Indian rupee was not able to convince them.NRI’s are busy sending whatever currency exchange gains they made into their bank accounts or settling loans.

 

Not only, the Gulf situation is scaring off the potential buyers, the Government of India has tightened up its real estate development game through RERA act and also the induction of GST in which taxon and off-plan properties went up as high as 12%.
Weak demand has not led to property values crashing because labor and GST induced costs have already raised project costs. Small builders and developers are forced to reduce rates as it is a question of survival for them.

Demolition of flats in Maradu due to violation of CRZ rules, the devastating floods that hit in August 2018, had created fears in NRIs in investing their hard-earned money into Kerala’s property market.
Among all the dark clouds hovering over Kerala’s property market, the only ray of hope is the cheap rates of home loans.