Real estate

His colleague, transport minister Nitin Gadkari, said as much.

“The move will check the black money in real estate. Taxpayers need not panic. There will be teething trouble but things will even out eventually.”

The market for farmhouses, residential plots and builder floors in New Delhi and resale apartments in Gurgaon, Faridabad, Noida and Ghaziabad is under the secondary or unorganised segment.

Questionable transactions are said to be widespread in this segment, which the government is trying to clean up with a landmark law to regulate the real estate sector that contributes about 9% of India’s gross domestic product.

The law is designed to protect millions of homebuyers facing harassment because of limited legal options at times of dispute, as regulator will oversee all future transactions and settle disputes.

Homebuyers would gain again from the government’s latest move that would do away with speculative pricing.

“There was a lot of speculative activity due to cash transactions. But now, prices will be real and it will be advantageous for the buyer,” said Shveta Jain of Cushman and Wakefield, a real estate services company.

Small-time operators in the realty business will bleed from the crackdown on black money.

“Because of huge cash involvement in the secondary market, property dealers and builders of small projects will take a severe hit,” said Sunny Katyal of real estate brokerage firm Investor’s Clinic.

The bleeding was acute on Wednesday. Property dealers said prices are being negotiated on circle rates — the minimum price set by the government at which a property can be sold.

“Properties were sold at `1 lakh a square yard and 40% of the payment was made in cash. But Tuesday’s announcement, circle rates are dominating the price … `65,000 a square yard,” a dealer in Gurgaon said.