It appears like Reserve Bank of India Governor Raghuram Rajan wants to keep in check with the real estate bubble. In one of major statements, the RBI Chief advocated on August 20 that the developers need to bring down the real estate prices in order to ease lending norms for home loans. Once the prices are lowered people will buy properties. The statement by the RBI chief can be identified as a strong reply towards the real estate developers who on the other side has demanded a rate cut for lending home loans.
At the same time, the rising cost of infrastructure and construction are not working in favour for a price down from the realty developers. Also developers are offering good discounts in the form of attractive payment plans, free parking and low interest of loans in favour of customers.
But even without the rate cuts for home loans, banks have constantly grown up by lending home loans. A survey has revealed that the total home loans given by the banks were increased by over 15% in the past one year. Also note that the overall lending by the banks just grew by over 7% which signifies that buying home or investing in properties are a major business for people.
But still properties are piling up in major cities like Delhi and Mumbai. This certainly is because people can’t afford these properties. This calls for a price down in the real estate sector which will be a solution for the scenario.
However factors like booming population, rising income level and the far spread urbanization will keep on driving people to metro cities like Delhi, Mumbai and Bangalore etc. As you know, the real estate consolidation can take very long time than the stocks, which fluctuate on a daily basis. So even if the stigma of properties continues for days or months or years to come by, real estate will forever remains the best arena to invest on since its demand won’t lose.