With interest rates heading north, the property market, which has been witnessing a correction across all verticals, is likely to see further price declines.
The hike in lending rates by banks, which is likely, would affect the bottomline of developers directly and also adversely impact the affordability for the property buyer. The silver lining is that the market slowdown is expected to result in a faster correction in property prices, which has been happening across all urban centres. Markets, which are yet to experience an overall slowdown in the real estate sector (for instance, the western suburbs of Mumbai) would feel the pinch, said an industry official.
Developers and home buyers are bound to feel the pinch of this hike, which comes at a time when sales are slow and buyers are resisting the steep increase in the cost of owning a home. The cost of construction will go up and banks will further cut their exposure in the property sector, forcing developers to tap unofficial channels of funds. There will be a flood of black money into the system, an official at a real estate fund said.
More : economictimes.indiatimes.com
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