Realtors seek cut in interest rate to boost housing demand

Expressing disappointment over the RBI's monetary policy, realtors body CREDAI today sought cut in interest rates on home loan to boost housing demand.

RBI today left key rates unchanged and unlocked about Rs 40,000 crore of funds by reducing the amount of deposits that banks are required to park in government securities.

In a statement, Confederation of Real Estate Developers' Associations of India (CREDAI) demanded a pro-growth stance on the policy rates" for the development of a housing sector.

"We at CREDAI appreciate the positive step taken by RBI to reduce SLR by 50 bps, which will release a liquidity of Rs 39,000 crore for the banks.

"We understand the central bank's priority to fight inflation. However, at the same time real estate industry also awaits proactive measures to stimulate the home purchase by bringing down the home loan rate," CREDAI National President C Shekar Reddy said.

CREDAI Chairman Lalit Jain said a long term status quo on interest rates would not help prospective home buyers.

"To provide shelter and to move the economy we have to work towards home loan rate reduction. Also, RBI has to consult CREDAI and develop a practical policy on lending to housing projects," he added.

Real estate sector is facing a huge slowdown in demand from last few years due to high borrowing cost to home buyers and developers coupled with low economic growth.

However, Global property consultant, CBRE South Asia Chairman & MD Anshuman Magazine said the RBI move to keep the repo rate unchanged will be appreciated by the industry.

"This status quo decision will bring in more stability on home loan interest rates. The move could also be seen as an indication of an economic recovery," he added.

RICS South Asia Managing Director Sachin Sandhir said the announcement of keeping the key policy rates unchanged comes on expected lines. "A low and stable inflation is a necessary pre-requisite for any rate revision."

Parsvnath Developers Chairman Pradeep Jain said the policy was on the expected line. "As the Union Government is about to present its first budget in a month's time, it gives valid reasons to RBI to be cautious.