RBI monetary stand may strike real estate industry

The real estate sector may discover the going tough with a expected go down in housing demand following the RBI kept key interest rates untouched, belying hope of rate cut.

Real estate industry, which was hoping a slash in the interest rates on housing loans, felt although property demand would continue to boost, a cutback in rates by the central bank could have given a boost to sales. In addition, it could have produced millions of jobs in the building sector.

“Low interest rates would have unquestionably encouraged requirement in the real estate, but still at the offered rates, the demand would remain on to rise as economy is on an upswing,” DLF Group Executive Director Rajeev Talwar told PTI.

The banking & real estate sector had wished that following a 0.75 % cut in interest rate by US Federal Reserve, the RBI would also bring down interest rate by 0.25 to 0.5%.

The interest rate on house loans have gone up from around 8% to over 12 % within two years, hitting the home sales in metros and tier-II cities as well.

“We would have liked a softening tendency in interest rates to come out from the credit policy, which would have assisted not only the real estate industry but also in keeping the tempo of economic growth,” Omaxe CEO Parekh said.

“Unlike the US Federal Reserve which is always ahead of the curve, Indian Central Bank is behind the curve and we take action only when we see economy slowing down,” Parekh said.


  1. Arjun
    Posted March 20, 2009 at 6:56 am | Permalink

    By the end of April or May the Int rates are expected to reduce.

  2. Poorni
    Posted April 5, 2009 at 11:36 pm | Permalink

    The prices are expected to go down even more…
    but there is a considerable fall

  3. Posted April 20, 2009 at 12:33 am | Permalink

    Hey, thats a good piece of information!

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