Despite DeMo, cash is still king in real estate

Despite the Centre's claim that demonetisation was an exercise to weed out black money, 44% of respondents of a nationwide survey said property purchases since demonetisation six years ago continue to have a cash component.

The survey, conducted by community social media platform LocalCircles found property transactions were the top area of cash usage from a value per transaction standpoint.

To the question as to what percentage of the value had to be paid in cash during the purchase of property (land, house, flat, shop, office, others) in the last seven years, 8% of the respondents said that on an average, they had paid over 50% in cash. While 35% declined to share the details, 21% claimed they had paid no cash during the transaction. While 15% of the respondents said they paid between 30-50% of the transaction in cash; 13% paid 10-30% cash and the remaining 8% paid up to 10% of the value in cash.

LocalSurvey said the situation has improved since its previous survey on the same issue last year as 70% of the respondents admitted to paying cash as part of the transaction for property acquired post demonetisation. “One encouraging sign is that as against 16% who admitted to having paid over half of the amount in cash in 2021, the new survey reveals that the percentage of such cases has dropped to 8% in the new survey. However, the 35% not divulging must also be taken into account and it is safe to assume that many of these individuals did pay some cash in the transaction(s) they conducted but they are just not comfortable disclosing the same,” LocalCircles said.

The other areas where cash transactions found prominence during the survey were salaries of domestic staff (20%), travel expenses (3%), personal services/ home repairs, etc. (10%). Among the respondents, 76% said they used cash for groceries, eating out and food delivery transactions in the last 12 months.

The survey received over 32,000 responses from citizens located in 342 districts of India. While 44% respondents were from tier 1 cities, 34% were from tier 2 cities.