National Housing Bank: High prices to force home loan growth dip

India's Housing finance watchdog National Housing Bank (NHB) has said demand for home loans will slow down in the next few months due to high property prices.

 Mr.R.V. Verma, CMD, N.H.B said,"Housing loans can be a bit sluggish because buyers feel there is no way of getting properties at a reasonable price, they are postponing their purchases.  Since 2011, April, home loan growth has been 16-17%, which is one percentage point lower than the previous fiscal. Sees credit offtake lower at over 15% for the full fiscal.

Mr.R.V. Verma, however, maintained that it is the booming property prices, rather than the repeated rate hikes by the RBI ( Reserve Bank of India) that is affecting demand.

"I think the main reason for the current sluggishness is the high property prices. If property prices come down, there could be an increase in demand even if the interest rates go up a little," Verma said.

The RBI has increased key short-term rates by a record 12 times over the past 18 months, with an eye to tame uncomfortably high inflation, which stood at 9.78% for August, 2011.

Home loan buyers, especially those who are on floating interest rates, are one of the worst-affected categories of buyers hit by higher interest rates.
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