Property prices in India which have been on the decline for several months on account of the credit crunch, are set to rise, according to Mr R.R. Nair, Director and Chief Executive, LIC Housing Finance Ltd.

 

According to him, people cannot expect further fall in property prices. That stage is over. Builders had lowered prices when they were in trouble in the last few months. For builders, the liquidity position has eased considerably and the cash flows have improved. They have also cleared off existing inventories. Therefore, there is no reason for them to lower prices.

 

As the demand picks up, property prices will go up. This could happen in the next five-six months. Moreover, builders had not increased prices in the last 15-18 months. Because of all this, there is a good possibility that property prices will rise.

 

Citing reasons for renewed housing demand, Mr Nair said that with a stable government in place, people feel that the economy will improve, the liquidity situation would be better and the soft interest regime will continue. They also feel that property prices have bottomed out. This is precisely why there is a renewed interest in buying homes.

 

The property prices had seen a correction in the last two quarters as demand for housing had dried up. Builders had been forced to lower prices as they were sitting on a large inventory. Some builders who had planned luxury projects had converted to standard projects.

 

With the economy looking up, there is confidence among builders that they can raise funds either through loans or through equity or QIPs. That is why builders have regained enthusiasm and started working on the projects.crackcrack

LIC Housing Finance Share Price

715.20 35.40 (5.21%)
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