finance minister Arun Jaitly keeps telling Reserve Bank Governor Raghuram Rajan to cut interest rates and now the latter has made a case for reduction in property prices. “If real estate developers, who are sitting on unsold stocks, start bringing down prices, that will be a big help to sector because once there is a sense that the prices, that will be a big help to the sector because once there is a sense that the prices have stabilized, more people will be willing to buy,” Dr. Rajan said. Given the high inventory of unsold flats across the country, he said, “I think we need the market to clear and with growing unsold stock we need to figure out ways to do it.”
The RBI Governor was speaking with State Bank of India boss Arundhati Bhattacharya at an interactive session in Mumbai on Thursday on Thursday, August 20. His comments come at a time when the realty sector is struggling with low demand and rising inventory of unsold flats. He said the developers should bring down house prices else the realty sector wills not some out of doldrums, “It will help the economy if realty firms reduce prices of unsold stocks,” he added. Property prices in some cities have witnessed small corrections, but analysts say there’s further scope for decline in property prices. Analysts have also cited high interest rates as a big factor for the slump in property sales. The Governor said banks should explore ways to make home loans easier, but quickly added that property prices must fall before rates are brought lower.” We don’t want to create a situation where prices remain high at a level that demand may not pick up to the extent necessary,” Dr. Rajan said. Earlier, he had said the central bank will cut interest rate provided it feels confident that inflation will remain below 6 per cent even after the reduction, “we will cut rate when we see that even after the rate cut inflation will remain below 6 per cent,” Dr Rajan said. RBI expects retail inflation to be around 6.1 per cent in January-March, 2016.
Umang Estates 