<div>A day after RBI governor Raghuram Rajan advised builders stuck with unsold inventories to cut rates, realtors' body CREDAI (Confederation of Real Estate Developers’ Association of India) on Friday (21 August) said there is no scope to reduce housing prices and demanded that interest rates on home loans as well as taxes should be reduced to boost demand.</div><div> </div><div>“While we respect the RBI governors concern for kick starting the real estate sector, it would be prudent to say that from the developers side a substantial reduction in prices has already happened across the country and any further decrease in sale prices would be a deterrent for the growth of a sector that contributes so much to the economy and employment at large. The onus is now upon the state government to rationalise taxes, ready reckoner rates and streamline the approval process to bring down property prices and provide relief to home buyers. A rate cut in the home loans is the need of the hour to relive the home buyer of the huge burden of mounting EMIs. Industry on its part is eager to focus on execution and supply of good quality housing stock to enable the governments ambition of housing for all by 2022. But at the same time, we seek the guidance and cooperation from statuary and legislative bodies to be able to positively work towards Prime Minister Narendra Modi’s vision,” said CREDAI president Getamber Anand.</div><div> </div><div>"Any further decrease in sale prices would mean an out of pocket expense for the developers thereby acting as the last nail in the coffin of an industry which contributes so much to the economy and employment at large," he added. </div><div> </div><div>Credai, which has about 10,000 realty developers as members, sought that government should rationalise taxes and circle rates while interest rates on home loans should be cut.</div><div> </div><div>"It is now largely up to the state to rationalise taxes, ready reckoner rates and streamline the approval process to bring down property prices and provide relief to the end user. A rate cut in home loans is the need of the hour to relive the home buyer of the huge burden of mounting EMIs," Anand said.</div><div> </div><div>Raghuram Rajan is famous for correctly pointing out the prevailing risks in the global financial system back in the mid 2000s and warned leading policymakers at a Jackson Hole conference about a potential financial armageddon. He has been famous since then.</div><div> </div><div>Rajan, on Thursday said real estate developers should consider cutting prices on their unsold inventory property to help clear up the stock as also help boost new demand. "I do believe that real estate developers, who are sitting on unsold stocks, should reduce prices on unsold stocks,’’ said Rajan during an interaction with Arundhati Bhattacharya, chairman of State Bank of India in Mumbai. "We need the market to clear up . . . we don’t need a situation where prices are high and demand doesn’t pick up." </div><div> </div><div>Coming hard on property developers, top mortgage lender HDFC's Chairman Deepak Parekh had said in June that they are unrelenting on pricing despite a growing inventory of unsold housing units.</div><div> </div><div>Parekh also asked the developers to shift their focus away from high-end luxury housing and said the "real demand is in the affordable housing segment".</div><div> </div><div>In an interview with <strong>BW | Businessworld</strong>, dmg India country head Tej Kapoor has said that "real estate market has almost touched the bottom. We have more than 4 years of unsold inventory in market. The dichotomy is that on one hand we have housing shortage problem and on other hand 284,000 unsold units which explains to you that the price curve is just not right and sooner or later the correction is bound to happen". - (<a href="http://www.businessworld.in/companies-markets-sector-reports-interviews/real-estate-market-has-almost-touched-bottom-india-says#sthash.ZA0uVxfC.dpbs"><span style="color:#ff0000;"><strong>Read more</strong></span></a> )</div><div> </div><div><strong>Teaser Loans Back?</strong></div><div>Citing rising real estate inventory, SBI Chairperson Arundhati Bhattacharya on Thursday (20 August) had urged RBI to consider re-introduction of ‘teaser loans’. They are a tool to attract borrowers with low interest rates for the first 2-3 years of the total loan tenure. “I am told that real estate stock is at 2-year high and I was thinking if it is possible for a little while...could something of this (teaser loan) kind could be allowed, given the fact that this is one of the portfolios where NPAs are the lowest,” Bhattacharya told Raghuram Rajan.</div><div><br>Referring to home loans, SBI’s Bhattacharya said the NPAs from this segment are minimal. In a situation similar to 2008, SBI could offer home loans at a rate lower than its base rate for an initial period and raise it in the subsequent years. Schemes on similar lines had helped lift demand after the global financial crisis in 2008. The same could happen now. Bhattacharya emphasized that due diligence on these loans would be the same as for all other regular loans. </div>
