These have been turbulent times for the Indian real estate industry. Or the calm before the storm if you will.
In the last two to three weeks, I have witnessed many incidents that will have a direct bearing on the real estate industry. The National Green Tribunal’s ruling that the vast amount of construction along the Noida Expressway is contributing to pollution is promising. Despite the fact that the fortune of thousands of home buyers is impacted, it was critical that there is some statutory check on the unruly building practices. The leniency in giving them time to correct themselves is extremely positive.
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That India is facing a 22.7 million units housing shortage and trying to cover the gap in just seven years by 2022 is ambitious. However, without stringent controls the entire country would face the type of pollution that the NCR is facing. For a healthy and prosperous India . For a healthy and prosperous India where there is adequate shelter to house all its citizens, these checks are critical. Else healthcare costs rising due to rampant pollution would be the price to pay.
RAnother policy move that warmed the cockles of my heart was the stricture given to the banks by the Governor of the Reserve Bank of India, Raghuram Rajan. In no uncertain terms, he told the country and the banking community that there would be no sops if the benefits of basis point cuts are not passed on to the consumers. Within hours of this chiding, three leading banks have dropped interest rates on home loans. Many others have followed.
Many consumer surveys on Magicbricks tell us that rising home loan interest rates is one of the critical factors for deteriorating consumer sentiment. Many feel if they take a loan on higher rates the new benefits do not flow to all.
However, in an ideal situation, a home loan consumer should be able to take a floating rate of interest and rest assured that the benefits of falling rates will come to him or her too. That has not happened for a while and only new consumers get the special benefits of lower rates. After years of being taken for granted the consumer prefers to err on the side of caution. That is not good for the industry or the consumer. The small cuts in interest rates and the RBI Governor’s tough stance show a tilt towards the day of the consumer. Will the buyer shed his inhibitions and start negotiating?
E Jayashree Kurup is Head, Content & Research, Magicbricks.com
Content Courtesy: Magicbricks.com