Bangalore’s Property Market Set for Major Price Surge: Here’s What You Need to Know
Property prices in the Silicon Valley of India, Bangalore, are primed to substantially increase from October 1, 2023. As per the latest statements by Revenue Minister Krishna Byre, the average increase in guidance value is proposed to be 20–30 percent, depending on the locality. This comes after the change was first suggested by the Chief Minister Siddaramaiah during the proposal of the state budget 2023–24 on July 7, 2023.
What does guidance value mean?
Before we delve into the nitty-gritty of what this spike would mean, let us first understand what guidance value means. Guidance value, or circle value, as it is often called in many states, is essentially the estimated value of land as per state government records. It is the minimum legal value at which a property can be registered in a state. Therefore, any change in the guidance value leads to an immediate change in the market value of the property.
Is there any regional variation in guidance values?
While, as per law, guidance values are supposed to be revised each year, the last time they were revised was in 2018–19 by a 25 percent hike. Now, after 5 years of gap, the state government of Karnataka’s Revenue Minister, Krishna Byre Gowda, has announced on September 19th the plan to raise the guidance value. While on average the guidance value will be hiked by 20–30 percent, the hike may vary in different regions. For instance, in areas where the property price in Bangalore is 200 times the guidance value, the latter might be increased only by 20–25 percent. However, in regions like the IT-dense hub of Electronic City, where the market value is 500 times the guidance value, the increment might be as much as 50 percent.
Why is establishing guidance value important?
The levying of a government-certained minimum property value is important because property taxes such as stamp duty and registration are one of the biggest lines of revenue for the state government. As per Mr. Gowda, Bangalore witnessed approximately ₹ 800 crores worth of property registrations till September 2023 since last year. Given these statistics and the legal mandate, the government’s decision to increase the guidance value appears to be a logical step. In addition to this, the monumental difference between the guidance value and the actual sale price has also led to the government’s move to align both and thereby curb black money transactions.
What impact has the move had?
The move has had a significant impact on the Karnataka real estate market, with the Sub Registrar office extending their hours from 8 a.m. to 8 p.m. until September 30th, with property buyers rushing to complete registration and avoid the increased prices.
