MUMBAI: The government's efforts in the past few months to curtail gold demand may have come as a saving grace for the real estate sector. For months, realty had been going through a slump in the country with high prices keeping the end-user demand low. As the government's efforts to moderate gold demand through import duties and other stricter norms began around July, investors and speculators shifted their focus from the yellow metal to real estate, said a report byIndia Ratings, the Indian arm of global ratings major Fitch. 

In mid-2013, faced with a high current account deficit that weakened the rupee to a record low against the dollar, among a host of steps, the government thrice raised the import duty on gold — the second biggest import item for the country. It also imposed tougher rules for gold loan companies, linked imports to re-exports and banned the sale of gold coins by banks. All these steps led to a slide in gold prices, and bullion lost its lustre as an asset class for investors and speculators, who started looking at real estate since stock and bonds markets too were showing weak trends around that time. 

In Mumbai, one of the largest real estate markets in the country, National Housing Bank's Residex declined from 222 in January-March to 221 in April-June but again went up to 222 in July-September last year. Similarly in Hyderabad, during the corresponding periods, the index declined from 88 to 84 and then jumped back to 88, while the change in Kolkata was from 197 to 189 and then up at 199. Among the large cities, Delhi was the only centre where the Residex continued to show a downtrend during these nine months, from 202 to 199 to 190, NHB data showed. 

In Mumbai, gold prices had jumped to over Rs 33,200 per 10 grams during mid-August but soon after the government clampdown on imports, the yellow metal crashed to about Rs 29,500 by early October, a slide of over 11 per cent in just about a month and a half.