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Real Estate Price at its Lowest – Good News for Home Buyers!

There are rampant news articles about there being a correction in pricing of real estate by various opinion makers who seem to think they have the authority to make such claims. As an industry body, we again reiterate that the industry has always been catering to the primary market which comprises of end users who aggressively avail home loans. Moreover, with this step of demonetisation, banks are again going to be flushed with liquidity of approx. 15 lakh crores. The banks will be compelled to lend aggressively and for that they will have to lower the interest rates. We expect that the RBI would definitely in the coming months reduce the REPO rates by at least 2% so that a home loan would come down to at least come to 6%. What will enable the RBI to do that the inflation would be at an all-time low considering that cash in the market has totally dried up which is a very good sign. The home loan rates coming down to such levels of 6% in the next year or so, the atmosphere will become more like the west where home loans are available at 5%. The good news is that there is a documented shortage of housing and homes in our country. A lower home loan interest regime will encourage buyers to leverage more and in the coming six months to a year a lot of home buyers will avail the opportunity of a very low interest regime and aggressively start buying homes. So truth of the matter is that this entire demonetisation move is going to spur a huge activity in the home buying space by end users who will be aggressively availing home loans. The logic needs to be understood by all home loan buyers and they should beware of being misguided by opinion makers who are claiming that property prices will fall because, end of the day, the pricing today in real estate is at its lowest and it is not possible for a developer to reduce prices further.