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Rising loan rates bite home buyers

Feb 14, 2007 07:59 PM IST Business Business

Mumbai: Surging home prices and rising interest rates are beginning to bite. Many home buyers say they will have to postpone or hold their decision of buying homes right now. “Can’t buy a home right now as can't afford to take a home loan,” Neerav Joshi, a home loan aspirant. Another home loan aspirant Ninad Gala said, “I will have to wait till loans become cheaper or prices comes down. Can't afford right now.” Builders say this drying up of buyers has pushed down property prices on the outskirts of metro areas and in smaller towns by nearly 10 per cent to 15 per cent. They say that since the supply of real estate in these areas is still quite good prices are likely to come down further. “Demand for mid level segment houses has slowed (in areas where supply is abundant). In Mumbai in the Eastern suburbs – we have not seen so much of a slowdown but Thane has seen some stagnation and reduction in demand. Tier 2 and tier 3 are subject to a very quick correction in prices,” said Runwal Group MD Sandeep Runwal. Builders say speculators who took loans for investment in real estate have also reduced sharply as loans have turned expensive. However, in metro areas where demand from genuine home buyers exceeds supply, prices are likely to remain firm and even increase further.