City realtors rues as RBI keep lending rates unchanged

HYDERABAD: Realtors across the city expressed disappointment over RBI's decision to maintain status quo on key rates in the monetary policy on Tuesday,at a time when inflation is under control.

Real estate developers had advocated a reduction in interest rates to facilitate lowering of entry barriers and spur demand for the real estate sector and free home loan interest rates from inflation expectations, keeping in view the mission to provide housing for all by 2022.

C Shekar Reddy president of CREDAI-National said, 'The RBI's decision to keep the key rates unchanged will not help the real estate sector development.

Presently the overall inflation is under control as expected by the RBI, the crude oil prices are also low, the overall business requires an upword momentum. A reduction in policy rates at this juncture would have a significant impact in boosting the industry and facilitating growth.'

With the housing and finance ministry also advocating for interest rates to be brought down for developers and end user to promote the mission 'Housing for all', Reddy feels that realtors are already facing a great task with high prices in the industry.

'The real estate sector has been struggling with high cost of labour, material and funds along with moderate demand over the last few months. There is a strong need to lay out a clear policy and lower the cost of borrowing to help developers focus on development,' he pointed out.

According to Reddy, there is already a shortfall of 18.78 million units in urban areas and is expected to meet the expected demand for housing of 30 million units by 2022 to ensure housing for all.

While acknowledging some of the government's initiatives to enhance growth in the sector, realtors feel that the lending rates continue to be very high, thus inconveniencing the consumers.

'Though there are favorable initiatives which the government has introduced focusing on increasing real estate sectors growth the lending rates are still very high and limit the eligibility of the home buyer.

'We are looking forward to devising a formula independent of the prevailing inflation expectation to provide home loans at reduced rates to ensure increased eligibility,' Reddy added.

Echoing similar sentiments, M Vijay Sai, secretary general, Telangana Real Estate Developers Association, said, 'We all expected that there would be a downward trend which would have been transferred to housing loans as well. If prices would have been reduced, it would have been great for the real estate sector.

All the sectors expected at least some concession but they stuck to their ground. I think if concession was given it would have served as a stimulus to all the sectors and would have been a positive sign but we are unable to understand the logic behind this decision.'

With the housing sector poised to grow manifold in the next decade, requiring an estimated investment of about $1.2 trillion, realtors feel that the RBI should liberalize the norms.

Property Prices Dip in City

Hyderabad sees a marginal dip in prices in Q3-14 (July-September) over Q2-14 (April-June), according to a report. The report reveals that residential property prices per square foot saw a decline of 1 per cent in Q3-14 as Q2-14. Areas such as Jubilee Hills registered a 19 per cent jump in the quarter-on-quarter analysis, while Banjara Hills registered a 11 per cent jump.

At the same time, Dilsukhnagar recorded 10 per cent growth in the quarter ending September 2014 and 22 per cent in the last year due to good connectivity via extensive road and Metro network. Owing to the presence of IT companies, Gachibowli witnessed an appreciation of 19 per cent in the last one year. Incidentally, Banjara Hills demonstrated a growth of 31 per cent in the YoY analysis.