11th March 2016, Gurgaon: The effects of recession in the real estate sector can be seen in the Gurgaon property market as the circle rates are likely to fall by a significant margin of 5%. The Gurgaon district administration has reduced the circle rates for all segments of the real estate market for the fiscal year 2017-18.

If accepted, this will be the second consecutive year of circle rate fall in the Gurgaon real estate sector. The circle rates were reduced by 10% to 15% in the previous year in different parts of the district.  Gurgaon circle rates have not increased in the last 4 years. The rates were unchanged in 2014-15 and 2015-16.

The current revision in the circle rates can also be seen as a reflection of prevailing market sentiment. However, customers should note that in some areas of the district, the circle rates are higher than the market prices.

For those who are unaware of why the circle rate is important, they should understand that this rate is the price on which the buyer has to pay the stamp duty to the government while registering the property. It is the minimum value on which the sale of any plot, apartment, build-up houses, or commercial property takes place. Such deduction in circle rates can be highly beneficial for the buyers as they will be relieved to some extent from the high capital gains tax, stamp duty, and registration charges as well.

Developers are seeing this deduction as a factor responsible for potential market revival.  However, they expect the differences in rates in some areas of the district to remain. The high circle rates were a prime reason why buyers used to avoid buying property. The reduction will bring some relief to such investors and others looking to buy a home.

The difference in rates is also costing the government as people’s hesitation to buy property in the outskirts of the district is causing a fall in its revenue generation. The reduction in circle rates is likely to bring some parity for different areas and make a purchase more lucrative.