Pranab Datta- Chairman, Knight Frank India
"Finally, we have the rate cut (start of the series of cuts that hopefully will follow over several quarters, influenced by the overall inflation situation and the economy’s need to perk up growth rates) which coupled with the lower CRR should provide great relief to Real Estate industry reeling for quite some time now under the burden of huge debts on one side and poor cash flows caused by slowdown in sales. The consequential drop in home loan rates will greatly benefit consumers and stimulate demand for new housing. Considering the sharp drop in housing demand, a 50basis point reduction would obviously have been more desirable and would have also sent a powerful signal towards a more facilitative environment. But the 25 basis point reduction, anticipated by the large sections of the economy, is still a good starting point.
While this long awaited move by the RBI will trigger off the change in sentiments and catalyze the required buyer behavior, sharp revival in the fortunes of the industry will be accelerated if the demand resistance arising from high prices of housing can be addressed through more affordable prices, and of course in that regard the deceleration in the rate of inflation as well as lowering of the finance costs should be a good beginning. The industry has been appealing for rate reduction for quite some time and now that the step has been taken, hopefully the stakeholders too would take the required complimentary steps to bring about the positive reversal in the industry’s fortune for the overall well-being of the economy."
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