Impact of High Interest Rates and Prices on Real Estate Sector Growth
Leading home loan lender ICICI Bank acknowledges the impact of high interest rates and property prices on the growth of the real estate sector, while dismissing the existence of an asset bubble.
ICICI Bank's Perspective
ICICI Bank Joint Managing Director Chanda Kochhar stated, "Clearly there is a slowdown in the number of deals …interest rates have gone up from 8% in the past to now 12% and prices too have gone up but an asset bubble is not there". Kochhar anticipates a market correction, primarily in the number of transactions rather than property prices. 
She elaborated further, adding, "Since it is genuine demand in general and the salary levels are increasing, both customers and builders are playing a wait and watch game".
Builders' Financial Stability
Kochhar explained that builders are currently able to maintain prices due to their reliance on equity capital rather than debt financing, allowing them to withstand market fluctuations without the pressure of immediate debt repayment.
She posed a rhetorical question, adding "Now they can afford to sit with the capital and that is the reason why prices have not corrected…the question is who will blink first".
Speculation vs. Actual Demand
Kochhar emphasized that speculative investment in Indian real estate has historically been minimal, with growth primarily driven by genuine demand and affordability. She observed that the real estate sector in India has always been driven by genuine housing needs and purchasing power, unlike markets where speculative activities play a significant role.