'Property prices to rise in a year, then correct'

Housing regulator, National Housing Bank (NHB), which is awaiting $500 million loan from the World Bank for low cost housing, today said property prices would rise in the next one year, but that would result in correction in these rates in all the metros subsequently.

"In the next one year, property prices would be moving northwards which will create a dampening impact on demand, resulting in correction of prices," NHB Chairman R V Verma told reporters on the sidelines of Skoch summit.

He said correction would happen in the prices in all the metros.

Correction in property prices started happening in India, after global financial crisis deepened in the middle of September, 2008 with the collapse of US financial services icon Lehman Brothers.

But after the economy revived, property prices have moved up again in India.

Many experts also believe that rising loan rates as a result of RBI monetary tightening moves would lead to correction in housing prices.

Verma also said NHB expects $500 million loan from the World Bank for low income home.

"It is in the pipeline. We are expecting feedback from the World Bank soon. The funding is in the pipeline for 2011-12," he said.

Verma also said NHB is entering into an agreement with Germany-based bank KFW for 50 million euro loans to fund energy efficient houses.

"We expect first tranche of funding in June," he added.

The NHB chairman said the bank has disbursed Rs 7,500 crore this fiscal so far.

"In March, we are expected to disburse another Rs 2,500 crore. In July-June 2010-11, we expects disbursal of Rs 11,000 crore of which Rs 2,000 crore will be for rural housing fund," Verma said.