Report9 : Rate cut in interest by banks was just the flicker the real estate market was waiting for. Realtors are cheering the moves of lenders such as State Bank of India, Housing Development Finance Co and ICICI Bank, that have shed their reluctance to pass on the Reserve Bank of India’s past rate cuts to customers.
Rate reductions, differing from 15 basis points (bps) to 35 bps, can fuel the realty demand which has already being stoked by the government’s smart cities, affordable housing and Digital India programmes that pivots on decreasing the population inflows into cities which are bursting at the seams. A basis point is 0.01 percentage point.
Home loans at 9.55 per cent are now being offered by State Bank of India, whereas HDFC is offering the same at 9.65 per cent a year. Women borrowers will now get loans at 5 bps lower rate. ICICI BankBSE 0.05 % also followed its mates and lowered lending rates on Tuesday to 9.65 per cent a year for loans up to Rs 5 crore for salaried professionals; loans will be 5 bps cheaper, for women borrowers.
Sandeep Ahuja, chief executive of Mumbai-based Richa Realtors said, “This is the trigger the market has been eagerly waiting for. We have already started seeing fresh interest from buyers.” Sandeep also added, “Many realtors in Mumbai have started rationalising prices. Companies that understand the right price and right location will see growth momentum.”
For a few years, Real estate industry has been shambled by poor demand due to high prices. The Reserve Bank of India’s high rate policy to counter inflation had stopped people from buying properties. Now, with the cutting policy rates by 50 bps last month, taking the total to 125 bps since January, the market looks good.
You can also read : Reduction in policy rate by RBI will make Home loans cheaper
The Corporation Bank chairman and managing director SR Bansal said, “The various measures of the government like ‘smart city’, Digital India, ‘housing for all’, along with revival in investment and consumption demand, will create a favourable platform for the real estate sector to grow.”
Earlier, the mood in the industry was dispirited. As sales volume dropped by 19 per cent in H1 2015 compared to H1 2014, new launches fell by a whopping 45 per cent during the period. Knight Frank, real estate consultants reported on India real estate covering the period from January to June. 6-7 per cent contribution to GDP is from Real estate sector and any movement is going to help the entire economy, especially the cement, iron and steel sectors and the job market.