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News18 » Videos » News18 Shorts

Property prices set to slide as banks hike loan rate

Jun 27, 2008 08:40 AM IST Business Business

New Delhi: Union Finance Minister P Chidambaram has said the double digit inflation will continue for some more weeks.

The Central Government as well as the Reserve Bank of India is not going to hesitate in taking more steps to control soaring prices, if the need arises with the markets also reacting adversely to the two major concerns - high inflation and oil price hike.

But one asset, which seems to be inflation-proof, is real estate, which is now starting to show signs of softening, particularly with banks raising interest rates and loans getting more difficult.

With possibility of home loans becoming dearer, this is still a good time to buy property. Property experts even say switching to Tier II and Tier III cities is a good option.

With the RBI raising repo rates to 8.5 per cent, one can expect a downturn in property prices. Experts predict a further slide in prices of 5-10 per cent over the next quarter.

"If the sentiment remains the same, the mortgage rates go up, they would impact the demand as well as prices. There will be further drop seen in both." Anshuman Magazine, Chairman & MD, CB Richard Ellis, says.

So a drop in demand could force property developers to bring down to prices to help increase demand. Many builders, especially in Mumbai, are now offering discounts to attract buyers.

"If you have a good location, some money, and a good developer, then you must buy now and not wait," BP Dhaka, COO, Parsvnath Developers, says.

Residential property prices have gone down by 15 to 20 per cent in the past few months across the country. For consumers, this may be a good time to buy a property but yes, bearing that loan may become tougher

So, an informed decision may help you clinch a good real estate deal that is facing a price correction in several parts of the country.

Also, the options to move to Tier II and Tier III cities can also be considered. According to experts property prices will go down in these cities even more as compared to the metros.

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