Banks Caution Developers Against Raising Property Prices
Banks across India are advising property developers to refrain from increasing real estate prices, warning that such actions could impede the ongoing market recovery. Developers, capitalizing on the recent surge in sales, risk discouraging potential buyers with inflated prices.
Short-Sighted Strategy
Central Bank of India Chairman and Managing Director S. Sridhar characterized the developers' approach as short-sighted and naive. "It is difficult to generalize, but as a whole, there is some more scope for downward adjustment in prices, or in certain places it should plateau. That will stimulate the demand." He elaborated on the notion that raising prices will stimulate demand by saying that the developers operating under that principle were being naive.
Fragile Recovery
Sridhar further cautioned that upward price revisions by real estate players would "stall the recovery process." He acknowledged that demand for housing loans had indeed picked up amongst banks but stressed the delicate nature of the current market upswing: "Demand for housing loans has picked up among the banks but the situation is still fragile." The Central Bank of India chief's observations underscore the potential risks associated with premature price escalations in a recovering market. Maintaining affordability and stimulating continued buyer interest appear crucial for sustained growth in the Indian real estate sector.