RBI rate cut could boost Chennai real estate market

Chenna:

The rate cut of 50 basis points by Reserve Bank of India is a positive step and could boost the housing sector feel city realtors.

Confederation of Real Estate Developers' Associations of India president T Chitty Babu told Express on Tuesday that the rate cut is a good initiative but builders expect more from the government.

He said that after a gap of three years, Reserve Bank has  slashed short term lending rate by 0.50 per cent to 8 per cent. “This will generate interest among the buyers. We were expecting it for the last two months,” said Chitty Babu.

Siva Krishnan, head of residential services (Chennai) Jones Lang LaSalle India told Express that the .50 per cent  will give a boost to Chennai residential market. “People were earlier talking about .25 points. The decision will prompt banks to cut lending rates for home loans,” he added.

He said this will prompt the demand among end user maket buyers (under Rs 20 lakh) as they are the ones who will benefit substantially from the rate cut, Krishnan said.

Interestingly, RBI has hiked interest rates a total of 13 times between March 2010 and October 2011. T And many builders did not expect .50 per cent rate cut. “I expected .25 per cent cut and this move by RBI is a growth signal,” feels K K Raman, executive vice-president and zonal head of DLF Southern Homes.  

But many feel it is unlikely that property prices will come down because of this rate cut. It is likely there will be an upward bias on property rates because of the anticipated improvement of sentiments with buyers who have so far been sitting on the fence, waiting for some signals of relief. Raman feels this will also result in loans for builders also coming down. “The property rates will not come down but the EMIs will be affordable,” said Raman.