Despite a slight drop in interest rates on home loans, real estate prices are still very high in big cities. Experts say it will stay that way for several months. That means most people still can't afford a home of their own.
Vivek and Smeeta together bring in Rs 50,000 every month. After 15 months of negotiating expensive bank loans and leaping property rates, they've decided owning a house in Delhi is Mission Impossible.
"We have been hunting for our own house for quite some time now. But with a budget of Rs 30 lakh we can afford a house only in the outskirts of Noida or Gurgaon, so we decided to go in for a rented accommodation," said Smeeta Verma, Resident.
All across India, middle class families are getting doors slammed in their face. Home loans have climbed by five per cent in the last four years while property prices have doubled in parts of cities like Delhi, Bombay and Bangalore.
Fall in sales
A survey conducted by ASSOCHAM or Association of Chambers and Industries show that sale of residential property in the last three months is 70 per cent lower than the same period a year ago.
Over the last four years, the resale market has dropped by 60 per cent in metros, so nobody is buying property as an investment any more. The survey also found that 33 per cent of those who've taken home loans have been forced to extend their loan period by five years because of rising interest rates.
Prices not to fall
But real estate experts argue that dropping interest rates is not the way to go because property prices are totally out of reach for the average Indian. Every experts NDTV spoke to confirms that prices will not be falling in the next few months in any major metro.
"But if someone is expecting the property prices to fall to 2002 levels, that is quite unlikely. In certain pockets like NCR, Bombay, Bangalore the sheer demand itself will help property price to sustain or go for a minor correction. But for smaller cities we may see a major correction," said Malay Ray, Business Head, DCM Services Limited.
Banks like State Bank of India and Punjab National bank have dropped their interest rate by 0.5 per cent for the festival season, but they deny that this will continue beyond Diwali. And the problem is that middle class India still has nowhere to live.
Source://http://www.ndtvprofit.com/
