Rate cuts give a substantial push to property buyer sentiments, and it was certainly high time for such a cut. Home loan interest rates increased by as much as 5-7 per cent in the last one year because the RBI hiked its repo rates by 50 basis points over the same period. In other words, home loans had become a more expensive proposition.
However, the real estate market does not depend only on marginally improved buyer sentiment – there are larger issues that hold the sector hostage right now. The liquidity issues post the NBFC crisis are a bigger concern. NBFCs and HFCs have seriously curtailed disbursements to developers. Moreover, the repayment capabilities of many developers are also in question.
Furthermore, though the account deficit (CAD) widened to 2.9 per cent in December, inflation targets are more or less within control and the GDP is estimated to grow at a very healthy 7.5 per cent in the new fiscal. Going by these indicators, the Indian economy is looking at a good financial year ahead – always assuming that a stable government is voted to power in the upcoming general elections.
By Anuj Puri
(The author of the article is the Chairman of ANAROCK Property Consultants.)