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Genuine home buyers moved away from the housing market due to higher prices and investors stayed away due to the weakening state of the economy.
Quarterly growth (y-o-y) in House Price Index (HPI) went below 16 per cent in Q1 of 2013-14 and further down in Q3 mainly due to subdued demand, RBI’s annual report said.
However, it moved up in the first three quarters of 2014-15, suggesting a moderate pick up in house price growth, particularly in cities like Delhi and Kolkata, the RBI said.
Last week, RBI Governor Raghuram Rajan said that developers need to lower prices to sell unsold stock and to encourage individuals to buy homes. “I do believe that if real estate developers who are sitting on unsold stocks bring down prices, that will be a very great help to the sector because once there is a sense that prices have stabilised, more people will be willing to buy,” Rajan said at an SBI banking and economic conclave.
These comments came in response to SBI chief Arundhati Bhattacharya’s suggestion to RBI to allow home loans below the base rate as real estate stocks are at a two-year high and bad loans in the housing segment are the lowest.
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