The measures announced by the Reserve Bank of India (RBI) are expected to hit home sales and prices are expected to correct by 15-20 per cent in the next two to three months, say real estate consultants and analysts.
Impact in 2-3 months
If rates rise and affordability falls, you can see the impact on property sales in the next three months. Home prices in Mumbai have crossed their earlier peak of 2007-08. Developers have been increasing prices despite a dip in volumes. RBI wants developers to focus on selling apartments and use that for construction purposes, than tapping other funds.
Mixed signals
The measures are expected to curtail speculation in real estate, say experts. Investors account for over half the sales of residential, consultants say. The policy is based more on perception than ground reality. Prices haves gone up only in Mumbai. In other places, it is not so. Those who want to buy houses will not wait for rates to come down or go up.
RBI's proposals also impacted the stock market. The BSE Realty Index was the biggest loser among sectoral indices, with a fall of 2.6 per cent.
Source : Rediff business
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