The move has been made by the banks for which the real estate market was waiting for. The banks has taken a decisive step towards the slashing interest rates. After a cut of in the interest rates by the Reserve Bank of India, the other banks also cut down the interest rates on home loans.
The rate reduction is varying between 15 basis point to 35 basis points across the banking industry. This reduction can push up the real estate market and other programs such as Smart Cities, Affordable Housing and Digital India. A basis point is 0.01 per centage point.
Sandeep Ahuja, the Chief Executive of Mumbai-based Richa Realtors said that this has been the trigger the market was eagerly waiting for. We have already started seeing fresh interest from buyers. “Many realtors in Mumbai have now started rationalizing prices. Companies which understand the right price and right location will see growth momentum”.
From the past few years, the real estate market has been hobbled with poor demand due to unaffordable price of property. However in some cases it has climbed 10-fold in a matter of decades. The reason behind the down fold of the market was the high rate policy of Reserve Bank of India and last month the RBI cut down the rates by 50 basis point for which the market in looking up.
After cutting the interest rates, State bank of India is offering home loan at 9.55% which is less compared to the home loan interest rates of Housing Development Finance Corporation and ICICI Bank which is 9.65% a year. Women borrowers get loans at five basis point lower rate.
The Chairman and MD of Corporation Bank, Mr. SR Bansal said that the various measures taken by the government like Smart City, Digital India, Housing for All along with revival in investment and consumption demand is going to create a favorable platform for the real estate sector to grow rapidly.
According to the report of Knight Frank (Real Estate Consultant) on Indian Real Estate the sales volume was dropped by 19% in the first half of 2015 compared to first of 2014 and the new launches of project fell by a whopping of 45% during the same period.
Demand for both office and retail spaces is likely to zoom going forward since an improved economic growth would boost net hiring by IT/ITeS and banking financial services insurance sectors. Prime Minister’s smart city plan is expected contribute to the growth momentum.
The official of Mahindra Lifespace Developers said that the government’s Housing for All policy and interest subvention scheme are going to create fresh demand. The government has also raised the threshold annual income level for the economy weaker segment and lower income group, making the policy more inclusive. The central government and the state governments should now work together to meet the gap. Establishment of mass and rapid transport system would be a key to the growth of the affordable housing segment. Half of India’s population stays out of the cities.
The former chairman and managing director of Uco Bank said that there has been a long-pending and large demand for housing, given massive the shortage of dwelling units. The lowering of rates would certainly help borrowers get the finance.