Noida Authority hikes land rates by up to 30% – How will homebuyers get impacted?

This is the highest land price rise that a micro market has seen among all the top 7 cities.

Noida Authority hikes land rates by up to 30% - How will homebuyers get impacted?
The move by the Noida Authority would significantly raise the land prices in a city where affordability has been the main driver of demand amid the coronavirus pandemic, which was earlier reeling under instances of developer insolvency cases and project delays.

If you were planning to buy a piece of property in Noida in the near future, here’s some bad news for you. The Noida Authority has decided to increase the land rates by 20% to 30% across several categories, which will increase property prices in the region and impact homebuyers.

Although the hike was expected (the last hike happened in October 2019), but it may eventually arrest housing demand as the overall cost of acquisition would go up for the prospective homebuyers. This along with the recent interest rates and property prices hike amid rising input costs will be a burden on the prospective homebuyers.

“If we look back, ever since the construction of the Jewar International Airport has begun, there has been a spurt in real estate activity in and around the airport, inevitably leading to rise in land prices. Land prices have seen more than 30-40% rise in the last two years, particularly because of the ongoing airport and the other developments in the area. More so, post the pandemic there has been an incessant rise in demand for plots which ultimately has led to a price rise,” said Santhosh Kumar, Vice Chairman, ANAROCK Group.

Several plotted development projects have been launched at Yamuna Expressway in the last two to three years and if we look at the plot prices, as per ANAROCK Research, Yamuna Expressway has seen anywhere over 38% rise in plot prices – from Rs 1,600 per sq ft in 2019 to nearly 2,200 per sq ft in H1 2022.

“This is the highest land price rise that a micro market has seen among all the top 7 cities. The land price rise is not just because of the growing demand but also because of limited availability in key areas. Noida in particular has no land available. Moreover, this price rise by the Noida Authority will further increase land prices. With land prices going up, we may further see its impact on the new launches. As it is, of the total new launches in UP in the last few months, developers have curtailed new launches in the NCR region because of the high land prices. They are looking to wait and watch,” added Kumar.

Also Read: Dwarka Expressway – Fast emerging as NCR’s most sought-after micro market

Piyush Bothra, Co-Founder and CFO, Square Yards, has a similar view. “The decision of the Noida Authority to revise the land rates by 20-30% at one go is a steep raise and will impact the housing demand in Noida in the coming months as property prices are likely to go up. Real estate developers will feel the pinch while acquiring land parcels and be hard pressed to increase property prices by 10-15% to accommodate the increased acquisition costs.”

Thus, serious homebuyers who look towards Noida as an affordable and reasonable zone to buy a home of their choice will have no other option but to shell out more as developers may pass on the cost to the homebuyer. First-time buyers, however, may rethink their decision and postpone their homebuying intention till a favorable time comes up.

“Noida is already reeling under the pressure of high amount of unsold inventory and stuck projects and this decision would further add to the negative sentiment,” added Bothra.

Also Read: Key questions to ask yourself before applying for a home loan

Realty consultants said the move by the Noida Authority would significantly raise the land prices in a city where affordability has been the main driver of demand amid the coronavirus pandemic, which was earlier reeling under instances of developer insolvency cases and project delays. So, the government should be cautious while taking such steps.

“Unlike most states, the government of the state has also refused to entertain the demand of circle rate and stamp duty reduction even though many of its peers in the country did so to boost the pandemic-hit realty. This move coupled with the recent price rise, 140 basis points rate hike by RBI since May, and the burgeoning cost of raw materials somewhere deeply impacts the market sentiments which still seems upbeat. Hence the government should be cautious while taking such steps,” said Vikas Wadhawan, Group CFO, Housing.com, PropTiger.com & Makaan.com.

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