Rate cut expected to soften home loan rates, improve dipping home sales
Jan 29, 2013
Source : The Times Of India
 
NEW DELHI: Home buyers could be in for a cheer this spring as home loan rates are expected to soften after the Reserve Bank of India reduced its key policy rates.
 
Developers, bankers and consultants say this cut of 25 basis points in Repo rate and CRR by the central bank could give a boost to home sales across the country, which have been lagging over the last few quarters.

"The cut in Repo rate should definitely have a positive impact on lending rates. CRR cut will improve liquidity with banks that will now have a greater supply of loanable money leading to improved sentiment in the industry," said RV Verma, chairman of the National Housing Bank.

While there is an expectation that home loans might become cheaper for home buyers, the extent of reduction will depend on each individual bank.

High interest rates, insecurity about jobs and an overall weak market environment have all played their part in creating fear in the minds of home buyers. Home sales have dropped across cities in the last one year-14% in Bangalore, 32% in Chennai, 25% in Hyderabad, 10% in the NCR-and this has put many developers in a spot of bother.

Bringing down home loan rates could bring some cheer to home buyers and improve market sentiments.

"The announcement is most welcome although it is cautious. It is not surprising given the contraction in development and manufacturing growth. It should release funds into the market and mean relief for buyers hopefully," said Rajeev Talwar, group executive director at DLF.

The slowdown in sales over the last few quarters has increased unsold inventory at the end of the December 2012 to 602 million sq ft that would take up to 29 months to be sold at the current pace of absorption. In the previous quarter it stood at 545 million sq ft (22 months).

RK Jain, executive director at Wave Infratech said reduction in repo rate would help the real estate sector significantly. "We expect home loan interest rates to get cheaper, which will help the real estate housing demand among end users and investors," he said.

The RBI's policy is definitely a key to boosting real estate market sentiment and sending out positive signals to global investors, said Shobhit Agarwal, managing director - capital markets at Jones Lang LaSalle India.

Developer body Credai welcomed the rate cut but was unhappy with the quantum. "Though RBI has made a good beginning, the repo rate cut by 25 basis points is just not enough. What we need is the creation of a robust supply to curb inflation for which RBI needs to continue to ease fund supply position, month-on-month and quarter-on-quarter for the realty sector," Lalit Kumar Jain, president of Credai said.

Latest Realty News

TN to construct 6254 apartments at a cost of Rs 1740 cr
Jan 29, 2013
CHENNAI: Tamil Nadu government plans to construct 6,254 apartments in Chennai, costing Rs 1,740 crore, to alleviate pressure brought on by steady increase in population in the city.
Realty firm Ashiana Housing to invest Rs 750cr on four new projects
Jan 29, 2013
NEW DELHI: Realty firm Ashiana Housing will invest about Rs 750 crore in the next five years to develop four new housing projects in Rajasthan and Jamshedpur.
Correction in the housing market may be round the corner
Jan 28, 2013
NEW DELHI/MUMBAI/BANGALORE: Home prices in Mumbai softened in the December quarter while price growth in other Indian cities slowed, two real estate consultancy firms have said, reinforcing speculation that a correction in the housing market could be round the corner.
Citibank's cash rewards for home loan referrals
Jan 27, 2013
Citibank has introduced a referral programme for its customers in India, offering cash rewards of up to Rs 75,000 if a customer refers his friend or family member to borrow money from Citibank to buy a house. The amount will depend on the loan disbursal.
Soon, Outer Delhi may grow vertically
Jan 27, 2013
NEW DELHI: The skyline in outer Delhi may change in the years ahead if the government approves a plan to let private developers build high rise codomimums, spacious 15-17 story housing complexes with modern facilities. To ensure that development is uniform and planned, the government is set to finalise rules for "land pooling" which would ensure that there is no indiscriminate building spree.
DLF to focus on core business, to launch more projects in 2013-14
Jan 27, 2013
NEW DELHI: Close on the heels of selling its non-core assets, realty giant DLF will shift focus to its core housing and commercial ventures and plans to launch up to 15 million square feet of new projects next fiscal.
Mumbai December property registrations at 24-month high
Jan 26, 2013
MUMBAI: Property sales registrations in Mumbai, the country's hottest real estate market , rose to a 24-month high in December reflecting the impact of festive season bookings, showed a report from brokerage Prabhudas Lilladher.
Biggest land acquisition in West Bengal soon
Jan 26, 2013
Kolkata: The Trinamool Congress government, which has voiced its opposition to land acquisition by the state government, is going in for the biggest land acquisition drive after coming to power.
Housing may get Budget boost with infrastructure status
Jan 26, 2013
New Delhi, Jan. 24: The Budget may accord infrastructure status to the housing sector. This will help the sector access funds on easier terms which, in turn, will help increase availability of houses.
Imposition of house tax on cards
Jan 26, 2013
The nominated councillors are in the process of preparing an agenda for imposition of house tax in the city. The elected councillors have been opposing the imposition of the tax and this was rejected by the House in a previous meeting.

Latest Realty News Of State

Realty Talk's