'Surgical strike' on black money: Will Indian real estate bubble collapse?

It is common knowledge that a lot of black money floats around in the real estate market. With the govt. deciding to invalidate all 500 and 1000 denomination notes of the Indian currency overnight, do you think there may be a crash in real estate prices soon (as early as next year)?

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Well, the news is that real estate stocks are down by 10-20% already after the govt. decison to take the old 500/1000 notes out of circulation. Which goes to show the market is already reacting to the fact that real estate demand powered by black money is going to take a big hit very soon.

So I think it is safe to assume real estate prices should also go down by the same margin. But Indian real estate market is a bit weird in the fact that it doesn’t follow market economics. Individuals, as well as developers, seem to always hold on to their units in hopes that the price will go up because that’s what they have seen all these years even if it defied logic.

Let’s see what happens now.

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Here you go, the finance ministry itself implies real estate prices will go down by saying “it will become within the reach of common citizens”. Waiting for the crazy bubble to crash!