Housing demand which has remained unresponsive in 2008 due to high prices and interest rates is likely to pick up in the new year in the backdrop of a declining interest rate regime, according to a leading home finance company.
Although there is a temporary slowdown, the demand for housing will increase in 2009, LIC Housing Finance Director and Chief Executive R R Nair said. While he would not predict price movements in the realty sector, Nair said that there was a "possibility" of them increasing.
Advising buyers not to delay their home purchases in the hope of a fall in prices, Nair said, "builders may start jacking up prices once they liquidate their inventories.
Now, rates have started falling. Builders might wait for a while, for two months or so, to liquidate their inventories. After that, it is anybody''s guess (on a likely price increase), Nair said. Asked whether the sector was facing a slowdown pan-India, Nair said that this phenomenon was confined only to a few pockets and was not an all-India problem.
There might be slowdown in a few pockets including Mumbai and Bangalore but there is no problem elsewhere, he said. Asymmetric price hikes in a few regions was the main reason for the slowdown, he said.
Realty prices flared up till January this year after they either stabilized or started declining except in select locations where they increased, he said. According to him, despite the increase in interest rates, customers stand benefited to the tune of 35 per cent. Prices across the board declined by 20 per cent and were it not for the rate hikes, they would have flared up by another 15 per cent, he said.
As an example, he said, LIC Housing Finance had increased its interest rates by 1.25 per cent till December which worked out to be Rs 80 for an EMI of 20 years. Price reduction in the sector has been a minimum of 20 per cent across the board. If the interest rates had not increased, prices would have further gone up further by at least 15 per cent. So, 35 per cent is permanent savings for the customer.
The slowdown mainly afflicts those builders who are targeting investors or speculators. But for those who are targeting genuine end-users, it is not a problem. May be some end-users were waiting for a price reduction but this is temporary and should not be considered a regular feature, he said.
Although there is a temporary slowdown, the demand for housing will increase in 2009, LIC Housing Finance Director and Chief Executive R R Nair said. While he would not predict price movements in the realty sector, Nair said that there was a "possibility" of them increasing.
Advising buyers not to delay their home purchases in the hope of a fall in prices, Nair said, "builders may start jacking up prices once they liquidate their inventories.
Now, rates have started falling. Builders might wait for a while, for two months or so, to liquidate their inventories. After that, it is anybody''s guess (on a likely price increase), Nair said. Asked whether the sector was facing a slowdown pan-India, Nair said that this phenomenon was confined only to a few pockets and was not an all-India problem.
There might be slowdown in a few pockets including Mumbai and Bangalore but there is no problem elsewhere, he said. Asymmetric price hikes in a few regions was the main reason for the slowdown, he said.
Realty prices flared up till January this year after they either stabilized or started declining except in select locations where they increased, he said. According to him, despite the increase in interest rates, customers stand benefited to the tune of 35 per cent. Prices across the board declined by 20 per cent and were it not for the rate hikes, they would have flared up by another 15 per cent, he said.
As an example, he said, LIC Housing Finance had increased its interest rates by 1.25 per cent till December which worked out to be Rs 80 for an EMI of 20 years. Price reduction in the sector has been a minimum of 20 per cent across the board. If the interest rates had not increased, prices would have further gone up further by at least 15 per cent. So, 35 per cent is permanent savings for the customer.
The slowdown mainly afflicts those builders who are targeting investors or speculators. But for those who are targeting genuine end-users, it is not a problem. May be some end-users were waiting for a price reduction but this is temporary and should not be considered a regular feature, he said.
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