Amid the demand of another rate cut at the next policy review on September 29, Reserve Bank of India (RBI) governor Raghuram Rajan, has said that 'It would be a 'great help' if realty developers sitting on unsold stock bring down prices…Once the prices stabilise, more people will be keen to buy houses.' Governor said that real estate prices need to come down in order to ease lending norms for home loans.
Rajan also said that builders should first bring down prices and clear the stock else easier home loans might keep realty rates high. He added that “I think we need the market to clear. With growing unsold stock, we need to see the ways to do it. Some of it might be by making loans easier, but we also don't want to create a situation where prices stay high at the level, which means demand can't pick up.”
RBI governor’s statement came after SBI chairman Arundhati Bhattacharya proposed that the RBI allow banks to provide home loans below the Base Rate. Such home loan schemes were available five years ago and were then described as “teaser” loans by the regulator. The governor's comments come at a time when unsold housing stocks are at a two-year-high and developers continue to hold on to prices despite a sharp fall in transactions.
Earlier, Rajan had said that Indian economy is showing signs of improvement, adding that a pick up in rural demand would further improve economic growth. He also said that the Reserve Bank of India continues to watch the progress of monsoon to assess the overall impact on inflation as well as global developments
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