There was speculation about ready reckoner rates being hiked in Pune, thereby impacting the real estate market adversely. The Ready Reckoner rates are the rates which offer indications for the value of residential/commercial property and land in areas which are allocated by the State Government. These are released on an annual basis in most cases. The rates vary depending on the area and infrastructure that is available. They also impact stamp duty paid on property transactions and State revenues as well. They also affect property market values. Changes in the Ready Reckoner Rates also affect realty construction costs and added transaction charges.
The Ready Reckoner Rates in Pune were proposed to be increased by approximately 3% this year and the rates remaining the same will be a major boost for the real estate sector in the city. The hike would have impacted the sector negatively. The rates are fixed on the basis of the sales volumes of property and registrations in each region. At a time when the real estate sector is impacted by GST and RERA, another hike in RR rates would have led to property sales volumes going down.
This decision to leave RR rates unchanged will now give a major impetus to the affordable housing sector in Pune. In the 2009-10 period, the RR rates remained unchanged in spite of real estate prices going down. Based on the market scenario in Pune, the prices of real estate should remain stable on a short to medium term basis. The supply and demand for real estate both came down initially in Pune after demonetization and RERA. Keeping the RR rates similar will benefit the realty sector in Pune. This will benefit end users who will not have to pay higher stamp duty on property transactions. This also makes the rates more sensitive for buyers in terms of value.
Increases in RR rates are positive only when there are high market prices and the market is witnessing good performance by way of sales figures. In case there are low market prices and RR rates go high, this will lead to conditions being unfavorable for both homebuyers and real estate developers. Taking into account the present scenario in Pune, the RR rates are rightfully kept unchanged until the market regains some momentum.