Indian Real Estate Forum - www.indianrealestateforum.com - View Single Post - Middle Class Indians have nowhere to live

John · 11-09-07

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.

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. Experts are of the opinion 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.

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.

11-09-07	#1
John Member Join Date: Jan 2007 Posts: 120 Thanks: 0 Thanked 0 Times in 0 Posts	Middle Class Indians have nowhere to live 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. 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. Experts are of the opinion 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. 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.